Indian steel mills defend price hikes in statement to prime minister

Wednesday, 30 December 2020 14:59:51 (GMT+3)   |   Kolkata

Facing mounting criticism from within the Indian government and user industries for sustained increases in domestic steel prices, Indian steel companies have communicated to the Prime Minister’s Office (PMO) defending their skyrocketing prices over the past months, according to a communication of the Indian Steel Association (ISA) to the PMO, on Wednesday, December 30.

 “We would like to highlight some of the very serious and compelling reasons that have left the steel industry with no recourse but to increase prices from time to time,” the ISA said in its letter to the PMO.

The defence of domestic steel producers comes close on the heels of steel minister Nitin Gadkari stating that domestic steel and cement producers have been cartelizing to increase prices, taking advantage of government policies to revive post-pandemic industrial activity, lending his voice of support to rising opposition against steel price hikes by various user industries.

The ISA pointed to issues relating to iron ore and price rises of all raw materials, the shortage of global steel supplies, and lower capacity utilizations caused by disruptions due to Covid-19 as the causes of the sharp rise in finished steel prices, while also seeking a temporary ban on exports of iron ore.

“Due to the temporary shortage of steel in wake of Covid-19 disruptions, international prices surged to over $750/mt from a bottom of $397/mt seen last year. As India is an open economy, steel prices in the country have also moved up,” ISA secretary general Bhaskar Chatterjee said in the communication.

He said that iron ore prices have more than doubled in June-December 2020 and, with an increase of INR 1,000 ($14/mt) in iron ore prices, the minimum impact on finished steel prices was around INR 2,000/mt ($28/mt).

The price increase in finished steel was also a factor in the 19 percent fall in steel production so far in the current fiscal year, the ISA said defending the steel price rises.

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