The Hindu Business Line : Cold rolled steel makers seek cut in domestic prices

Grievances
Coiled Rolled Steel Manufacturers Association holds exports responsible for high domestic prices.
Exports designed to intensify shortages to retain high prices in the domestic market, it says.

Mumbai May 30 The Cold Rolled Steel Manufacturers Association of India (CORSMA) has said higher exports of HR coil and semis such as billets/rerollables had led to rise in domestic steel prices.

Exports by Majors

"The net availability of HR coils for the domestic market in 2006-07 was 9.18 million tonnes against an apparent consumption of 10.58 million tonnes as the five major producers exported over 1.37 million tonnes of HR coils. It is significant that the export prices were lower by $80-$100 a tonne vis-à-vis the realisation from the domestic market. It is thus difficult to escape the feeling that the exports were designed to intensify shortages to retain high prices in the domestic market," the association said in a letter to Ram Vilas Paswan, Minister of Chemicals, Fertilizers and Steel. The association sought reduction in HR coil prices by Rs 5,000 per tonne to bring it on par with global prices.

"The average domestic price of HR coils has sharply risen from Rs 20,600 in March 2003 to Rs 29,000 in May 2007," it said.

It has also sought reduction in customs duty from 5 per cent to 2 per cent and imposition of 10 per cent advalorem duty on exports.

`No link'

Claiming no link between domestic and global steel prices, Corsma said,"Spot global export price of HR coils (Western Europe) of 2 mm thickness is quoted at $570-$580 (Rs 23,370-Rs 23,780) per tonne f.o.b (free on board, while the selling price by Indian producers to the domestic industry (excluding all taxes) is Rs 29,000 per tonne."

Top producers determine domestic steel prices on a monthly basis by adding ocean freight of $60 per tonne, customs and other duties of 6 per cent and port charges to the global price, the association claimed.

Corsma said it was unfortunate that though "India ranks as the cheapest producer of HR coils in the world, domestic prices were the highest."

Further, linking domestic prices to spot global export prices were untenable since "production costs of steel and per capita income in India was much lower than the US and EU.

Revenue loss

Besides, government has been losing substantial revenue due to the waiver of customs duties on the import of inputs for the steel industry such as coal and nickel.

"It is imperative that steel prices be determined by production costs keeping in view that the domestic per capita consumption of steel is only 33 kg against the Asian average of 145 kg," Corsma said.

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