After the hefty import floor price support of $ 302 per tonne, all the major steel manufacturers have jacked up their prices, thereby dealing a severe blow to users of HR coil. Major HR coil producers have increased prices by 5 to 10 per cent even as imports started drying up. ``The government move will promote inefficiency. The government has virtually stopped imports by putting the floor price. Now domestic manufacturers have jacked up the prices. It is a BJP bonanza to HR coil producers following intense lobbying by the influential steel companies,'' said an association member.

On an average, the HRC prices have been increased by Rs 1,000 to Rs 1,200 per tonne and cold-rolled coils (CRC) by Rs 1,500 to Rs 1,800 per tonne.Similarly, the galvanised plates and galvanised coil prices have been increased by Rs 1,500 to Rs 1,800 per tonne by the companies. The major producers of HR coils are Ispat Industries, Essar Steel, Jindal Iron and Lloyds Steel.

``The government has succumbed to the collective lobbying of HR coil producers. The result is that thousands of users of CR coil have been hit hard by the import floor price and hike in prices by domestic producers. It is like robbing Peter to pay Paul,'' association members said.

They also questioned the calculation of $ 302 floor price on imports. The inter-ministerial meeting had recommended a price of only $ 247 per tonne whereas the international prices are around $ 190 per tonne. ``The government should boost all the segments of the industry not the HR coil producers alone,'' they said.

HRC produced by Ispat is presently used by saw-pipe manufacturers and cold-rolled units. Both cold rollers and the pipe manufacturers have also raised the prices of their products by Rs1,000 to Rs 1,500 per tonne. ``Ultimately, the consumers will be the lower as they have to pay more,'' sources add.

The continuous inflow of cheaper steel products, mainly from Russia and other adjoining countries, till last month had kept the prices depressed. On an average, each month around 15,000-20,000 tonnes of steel products were imported. However, with announcement of the floor price to safeguard the domestic steel makers, imports are likely to come to a halt, say traders.Currently, domestic steel prices are ruling at around 20-25 per cent below the landed cost of imports, sluggish demand, repercussion from the user industry and continuous imports have all contributed to the reluctance of the domestic steel makers to raise prices and cover the price difference.

Now that one of the negative factors continuous inflow of cheap steel products in the country has been arrested by the commerce ministry, steel prices have started looking up. Since the announcement of the floor price by the commerceministry, there has been no bookings for the imported steel products, which otherwise were in the range of around 15,000-20,000 tonnes per month. The goods that came in the domestic markets were booked sometime in the last quarter of 1998.

After the announcement of a floor price, imports into the country have dried up. With the end-user segment also raising product prices, it has resulted in easy absorption of the price hike announced by the steel majors.