Steel makers hold on to price line but demand raw-material security

Ruling out any possibility of price control, the Steel Ministry today urged the steel makers to continue to be sensitive to inflationary...

Ruling out any possibility of price control, the Steel Ministry today urged the steel makers to continue to be sensitive to inflationary pressures on the economy and hold on to their price line, with the latter readily agreeing to do so. But they asked the government to ensure long-term raw material security as soaring input prices could jeopardise their expansion plans.

8220;I hope that steel makers would continue to support the government is its endeavour to control inflation. The manufacturers have informed the government that their self-restraint on prices would continue. The government does not want to go for price control as for the long run this could prove counter-productive,8221; Steel Secretary Pramod Kumar Rastogi reasoned. The three-month self-declared moratorium on prices announced by the leading producers on May 7 expired yesterday and speculation was rife that steel prices could soon be upwardly mobile.

Promptly endorsing the government8217;s concern, Assocham president and JSW vice-chairman and managing director Sajjan Jindal said on the sidelines of a Steel Summit that though there was no immediate plan to hike prices, yet the long-term expansion plans of JSW could be affected if its operating margin continued to be under pressure. He reasoned that JSW8217;s vision to produce 32 million tons of steel by 2020 may be affected if pressure continued to be on its margins, thereby resulting in a decline in surplus production and growth.

JSW Steel8217;s profits for the first quarter declined to Rs 219.35 crore against Rs 468.45 crore in the year-ago period on net sales of Rs 3,671.49 crore. Jindal had attributed the dip in his company8217;s margins primarily to the agreed moratorium by the steel industry to hold prices for three months that expired yesterday. Now that JSW Steel has yet again announced not to raise prices for the time being, Jindal said the margins could take a hit by another 10 per cent.