September 08, 2008

Raw material global cartel pushing steel prices up– Dr Irani

Mr JJ Irani director of TATA Sons last week said that steel prices are going up due to unprecedented rise in input prices as a strong international cartel of raw material suppliers is causing high input prices.

Mr Irani, in an exclusive interview with CNBC-TV18 said that "I think we are all talking about increases in steel prices but the first thing that we should look at is what goes behind and why are the steel prices increasing.”

Dr Irani9 said that “It is true that everyone is talking of steel because there are so many buyers of steel. But steel price are going up because the inputs into the steel making industry are going up. Not many people buy iron ore or coking coal. So they are not talking about that. But there have been unprecedented increases in these commodity prices and that is why the cost of steel making has gone up and that is the reason of why the steel price has gone up internationally. What has been agreed with the Prime Minister, of course the steel companies will adhere to that."

He added that "It all depends on the cost of raw materials and the cost of raw materials was put up towards the end of 2007 and there is a lag effect and that lag effect is now coming into force, and it is not just in India. Internationally also, steel prices have gone to unprecedented levels. Because there is a very strong cartel between the suppliers of raw material both coal and iron ore internationally, and our suppliers have tagged on to their prices. Somebody must look into why has the cost of digging out the raw material gone up, to substantiate such an increase in the cost of raw material, which in turn is putting up the cost of making steel."

Mr Irani further said that "I think the government must be realistic. They must look into the cost build up. It’s very easy to see why the cost of making steel has gone up and if the government feels that steel has to be conserved for the country and I think it should be, then of course steps has to be taken to make it cheaper and the cost of what goes into making steel should be made less. Then the steel makers will be very happy to keep steel in this country and supply it according to the requirements of our customers here locally."