October 11, 2008

Indian steel industry against regulator in the sector

PTI reported that Indian domestic steel industry has termed the move by steel ministry for a regulator in the steel sector as a retrograde step that will put the manufacturers between two prongs of a pincer".

Mr Moosa Raza chairman of Indian Steel Alliance in a letter to Dr Manmohan Singh prime minister of India said that "While steel manufacturers shared the government's concern about current price situation any attempt to regulate market forces operating on steel prices disregarding root causes is a retrograde step and will adversely affect growth of the industry.”

Mr Raza said that the input costs have shot up unimaginably high and have gone beyond the capacity of steel utilities to absorb the same. He cited that spot prices of iron ore have increased to USD 150 per tonne, scrap prices have shot up to USD 500 and coke from China has hit the ceiling with a price of USD 523 per tonne.

Mr Raza added that “The Indian prices of hot rolled coils are ruling at USD 800 per tonne, perhaps the lowest in the world, whereas international prices of steel are over USD 1,000 per tonne.”

Mr Raza said that "In the light of this, any talk of regulating prices will tantamount to putting the steel manufacturers between two prongs of a pincer.”

Mr Raza said that “On one hand the un absorbable cost push would compromise the margins for the steel producers, while on the other hand a controlled or regulated regime would compromise its very survival.’