To rein in steel prices and their ripple effect on the prices of car and commercial vehicles, the government today assured automobile companies and automotive component manufacturers that it was likely to bring steel under the purview of the Essential Commodities Act and also appoint a price regulator for the sector soon. Senior officials in the steel ministry, who met honchos of automobile companies and automotive component manufacturers today, assured them that steps were underway to curb the runaway prices of the commodity. “The measures could be notified within a week,” said a source who was present in the meeting.

While the government was keen that steel output be enhanced in the long-term, it was simultaneously keeping a close watch on the companies’ “cartel-like” behaviour and their income statements and balance sheets to see if they were taking advantage of the short-term demand-supply gap. A review meeting has also been scheduled after 10 days, the source said. The auto industry was represented by the Society of Indian Automobile Manufacturers (SIAM) and Automotive Component Manufacturers’ Association (ACMA). According to the auto industry, a 30-40 per cent rise in steel prices, as demanded by the industry, will push prices of integral components such as chassis by up to Rs 75,000. “The overall impact on a commercial vehicle could be as high as Rs 1 lakh,” said a senior executive of an automobile major.

The auto industry representatives also told the ministry that the price cut that steelmakers claimed had not actually taken place. “Steelmakers have been exerting pressure on us to enter into an agreement to either pay up immediately or be deprived of steel. Some pig iron manufacturers have already delayed their deliveries,” an auto component maker pointed out. The auto industry generally enters into long-term agreements with steel companies, though price negotiations happen twice a year — in April and October. While the rise in prices last October was insignificant, this time around it has been very high, largely due to high prices of coking coal and iron ore — key inputs for steelmaking. Hence, the negotiations are likely to be protracted.

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