October 11, 2008

Move to bar steel exports below domestic price

It is reported that union steel ministry is working to clamp down on exports below domestic price as a part of the national pricing policy that’s now in the works.

Though domestic realizations are higher than those from overseas sales, steel firms have been exporting at lesser than domestic prices to bring down inventories and artificially beef up demand to pave way for price hikes. Many consumer organisations have cried foul on this move and this is what is believed to have led the government to think about a pricing model.

Union steel ministry, though the total quantity of steel exports are yet to be collated, feels that even small shipments at lower realizations were not in the interest of consumers. Mr Ram Vilas Paswan union steel minister said that volatility in steel prices was not in the interest of the consumers and the so called system of benchmarking domestic prices to international prices, as supposedly followed by producers, was flawed.

A sub committee under the steel price monitoring committee is expected to finalise a pricing policy model. A preliminary report submitted by the sub committee has determined that realizations from domestic markets are higher than those from overseas. The price monitoring committee, which was set up early in 2007, raised the hackles of integrated steel producers who perceived this to be a throwback to days of the price control regime.