The spectre of inflation is still looming large and the government has made it clear that the war on prices is far from over, as reflected in the further tightening of the monetary stance by the Reserve Bank of India on July 29.

When contacted, all leading steel producers remained non-committal about raising prices and instead said the present price line would be maintained for some more time. JSW Steel has already said it would retain the current prices, so has Essar Steel. State-owned Steel Authority of India Limited and Rashtriya Ispat Nigam Limited have been asked by the ministry not to increase prices.

In a meeting with Prime Minister Manmohan Singh on May 7, leading steel companies appreciated the government’s concerns and volunteered to cut prices of their flat products by Rs 4,000 a tonne and lower those of rebars and structural steel by Rs 2,000 a tonne, besides promising to hold on to the reduced price line for three months. In return, the government withdrew the export duty, giving them some relief. Certain steel makers, however, justify a future hike, citing a spike in the costs of raw material inputs. But the government does not buy the argument, saying had it been so, the damage would have in the balance sheets. First-quarter results of companies such as JSW have taken a hit. Rising input costs have, however, not created any significant dent in the books of SAIL, an official pointed out.

According to the official, if producers do increase prices substantially, the ministry would be left with no option but recommending a re-imposition of export duty and initiate other fiscal measures.

The see-saw battle on prices between producers and the ministry began in April. Between January and April, prices of pig iron jumped over 70 per cent, that of construction steel rose 36 per cent and HR coils by more than 40 per cent. This prompted steel minister Ram Vilas Paswan to hold a series of meetings with the producers. The hide-and-seek game on prices continued forcing Paswan to ask the Prime Minister to consider imposing export duty. With persisting demand-supply mismatch, the government in May imposed the duty.