The Hindu Business Line : SAIL, Vizag Steel await Govt signal before another price hike

New Delhi April 4 Public sector steel manufacturers Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) are holding their hands before announcing another round of steel price hike, company sources said. A decision could come about after a meeting between the Steel and Finance Ministries here on Thursday or Friday.

On the other hand, major private sector producers have already informed their main customers about a tentative price hike in the range of Rs 1,000-1,200 per tonne with effect from April 1.

However, formally, none of the companies have made any announcements.

Sources in SAIL told Business Line that because of the uncertainty over the price hike, volumes have slowed down during the past four days.

"We have heard that a meeting is likely between the Steel Ministry and the Finance Ministry on the issue of holding steel prices at current levels in order to control inflation. But there is shortage in the market, indicating that the market can absorb some increases," SAIL officials pointed out.

Steel industry sources said "the Government can artificially influence the public sector units that account for around 40 per cent of the production. But if the private companies increase their prices and the public sector does not, it would be only a few middlemen who would stand to gain, officials said.

Price play

With steel prices rising continuously over the last year, the Government had announced several concessions in the Rail Budget and also in the general Budget. The Government has also imposed export duty on iron ore, which in turn would help the steel companies to source the ore at cheaper rates.

However, immediately after the Budget, steel manufacturers increased prices by Rs 1,000 per tonne and later reduced it by Rs 500 at Government's request.

Demand-supply

Steel industry sources said that though overall production has increased substantially, the market demand is higher than the production levels that have been achieved.

According to official production data released on Wednesday, steel production increased by of 10.1 per cent during April-February 2007 as compared to the corresponding period last year. The production rose from 40.237 to 44.300 million tonnes during the period.

Simultaneously, steel exports have also increased by 9.3 per cent during this period, rising from 3.934 million tonnes to 4.300 million tonnes.