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Alleged Cartel working in the steel Industry: FII Laments Steep Hike in Steel Prices

SME WORLD Bureau
Apr 2011

Frequent rise in Steel prices has shaken the steel product manufacturers in the country. About 25 to 30% increase in Steel Prices has resulted in inflationary conditions. According to Federation of Industries of India (FII), besides major steel producers, public sector SAIL has become a party to cause in this heavy increase of prices of steel leading to increase national inflation.

Addressing Press in New Delhi recently, FII Secretary General H.L. Bharadwaj said there is approx Rs.9000/- price increase in January and February alone by the steel producers. The FII press note says:

Demand in the market has been killed for steel pipes and other products.
Factories are closed as this heavy increase has resulted in total drop of sales of all engineering products including steel pipes.
All the manufacturers are carrying heavy stocks as sales are not happening.
Most of the factories are running @25% capacity and that too in order to keep the work force busy.
There is situation like FORCE MAJURE, which has put all the manufacturers into crises.

The Ministry of Steel plays an important role in the growth and development of country, due to which consumption of steel is increasing year after year. But the steel producers have increased prices in anticipating that Australia may hike the coke price in view of the recent floods that impacted Coal Mines. The coal stock which the producers have been receiving so far was at old and lower rates. So there is no reason for the Indian Steel producers to increase price in last two months.

Bhardwaj said unprecedented hike of the steel price will have great burden on consumer even while the nation is facing inflationary conditions. “This price increase would also lead to increase in the cost of products affecting the general consumers. Seven times price increased and that too very hefty in a period of one and half month. In the month of February alone price increase was done on 1st of February and again on the 3rd of February and still again on the 6th of February.”

“Never in the history of SAIL such type of anti industry and anti consumer action was ever taken resulting in the crippling of the economic activities in the engineering industry. SMEs have been invariably affected by this hike in prices. There was no cost push and no demand pull to justify these increases. The engineering industry feels that it is because of cartelization of SAIL with other HR Coils private steel producers. If this situation continuous and corrective action is not taken, it will result into millions of workers engaged in engineering industry going jobless.”

The Federation has sent out a distress call to the government appealing to intervene to control the inflation in the steel prices. “Otherwise all Cold Rollers, Pipe industries, Engineering Industries and every down stream SSI will be badly hit. FEII has suggested that the import duty on HR Coils be cut down to zero and there should be appropriate export duty on HR Coil exports to contain inflation in steel prices.”

Those who addressed reporters included J.P. Agarwal, Chairman, Surya Roshini Group, D.P. Jindal, Chairman, D.P. Jindal Group, Ajay Bansal, Managing Director, Hi-tech Pipes Ltd.

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