Steel price committee may get more teeth

The ministry of steel is considering increasing the powers of the price monitoring committee to enable it to check steel...

The ministry of steel is considering increasing the powers of the price monitoring committee to enable it to check steel prices more effectively. Last week steel minister Ramvilas Paswan had cautioned steel companies to refrain from increasing steel prices arbitrarily and pass on the benefits of the 2 per cent CENVAT duty cut in the union budget. The industry, however, defied the minister raising prices of flat products and hot rolled coils by Rs 2,000-3,000 per tonne and Paswan is now planning to follow up his words with action.

“There is a need to check prices of steel and we are considering making the price monitoring committee more powerful,” said a steel ministry official. “The intention is not to micro manage the industry but to ensure accountability and fair play especially in cases where companies have their own means of raw materials.”

While the committee which was set up last year may not have powers to levy penalties on erring companies, it can call upon individual players and seek justification of any price hike. In its current format the committee regularly hosts the industry as a whole and discuses steel pricing trends.

“Most of the steel makers cite rising raw material prices and international trends for hiking prices. However what is often not taken into account is the fact that some of our big steel producers have captive raw material reserves and are not that vulnerable or hard pressed to increase prices,” the official stated.

Paswan had earlier stated that a mechanism needs to be evolved to ensure complete transparency in pricing and specific raw material prices need to be studied. “It is true that coking coal and iron ore prices have gone up in the recent past but there should be discussion with the monitoring committee before a hike is announced,” he had said at a steel and mining summit organised by Indian Chamber of Commerce last week. “Raw material price increases need to be studied and a ratio needs to be worked out on how much should be passed on.”