Mining group writes to PMO for transparency in domestic steel pricing

Sajjan Jindal-led JSW Steel has bagged four iron ore mines in Odisha during the auctions held by state government on February 6
With domestic primary steel producers raising product prices month after month, the Federation of Indian Mineral Industries (FIMI) has written to the Prime Minister's Office (PMO) requesting a price monitoring and regulation mechanism for the sale of the alloy by these producers.

“The price of steel sold domestically should be in line with cost of production in the domestic market. The input cost of domestic steel players since almost all now have captive mines is very much under control. Then where is the need to have steel prices aligned with international prices,” Ashish Das, joint secretary general at FIMI told Business Standard.

Steel companies are set to increase prices by Rs 3,000 per tonne from September owing to cost-push and higher international prices. Moreover, companies have already raised prices by the same quantum so far in the quarter.

“The difference between domestic and international (steel) prices currently was about eight per cent. An increase in prices from September is on the cards,” Jayant Acharya, director (marketing, commercial & corporate strategy) at JSW Steel had said last week.

Sajjan Jindal-led JSW Steel has bagged four iron ore mines in Odisha during the auctions held by state government on February 6.

With this, all the primary steel producers, which includes, Tata Steel, state-owned Steel Authority of India (SAIL) and AM/NS India now have captive ore mines in the country.
Coking coal and iron ore are the key raw materials used in the making of steel.

Meanwhile, industry officials were of the view that current domestic price of steel is already very high compared to the cost of production of the alloy in the country.

“Current, hot-rolled coil price is at Rs 40,000 per tonne (in the domestic market) as against a cost of production which ranges between Rs 32,000-34,000 per tonne, depending upon the grade of ore and other cost parameters for the domestic integrated producer,” Sushim Banerjee, director general at Institute for Steel Development & Growth (INSDAG) said.

In long products, cost of production is in the range of Rs 29,000-30,000 per tonne and the product is being priced in the market at Rs 36,500 per tonne by the integrated producers, he informed.

Just as iron ore is a raw material for steel, steel is raw material for downstream engineering and various other products, many of which are exported.

High price of steel in India has deprived many downstream products their competitive edge in the international market, said FIMI in its letter dated August 28, 2020.

“If the steel industry is protected by Government from international competition, then it must pass on the benefits to downstream sectors, or else the import duty on steel and its various products should be removed to bring parity,” it said.

There is an urgent need to monitor and regulate the price of steel in India for boosting economic activities throughout the economy, as steel is a major input for all sectors, private and public, the industry body informed.

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