Steel wrangle: Tata says such low prices not sustainable, cuts not reaching down

New Delhi, July 16: It was daggers drawn between the steel ministry and private producers today with the country’s largest private steel maker Tata Steel slamming the Government for its failure to ensure price cuts were passed on to end-users. The ministry, on its part, claimed that had it not intervened at first place, steel prices would have been higher by at least Rs 10,000 a tonne. It also warned distributors that those found profiteering would be strictly dealt with.

Addressing a global steel conclave, Tata Steel managing director B Muthuraman said, “We observe that despite our reduction in prices the same is not reflecting in sectors such as cars and real estate. I have not seen any reduction in prices there, which makes a clear case for the government to intervene.”

When asked at the sidelines of the conference if prices at such low levels were sustainable, he bluntly said, “No”.

Predicting that global steel prices would be lower this fiscal compared with the last fiscal, Muthuraman said domestic steel makers shared the government’s concern on Inflation and had voluntarily cut prices with a promise to hold on to the new price line for the next three months. Indian flat steel prices were Rs 15,000 to Rs 20,000 lower than the prices prevailing in the global markets, he said.

Muthuraman said issues like iron ore exports and streamlining land acquisition needed urgent government attention to propel the country’s steel output to the level of 300-500 million tonnes over the next few decades.

“But these issues are not drawing anybody’s attention, and could adversely affect India’s economic growth. India’s ability to create steel is poor and it is becoming worse,” he said.

Steel Minister Ram Vilas Paswan pointed out that though companies cut prices, some of their dealers were selling at bloated prices, taking advantage of heavy demand in the retail market.

“We will deal very severely with such market manipulation. We have already directed PSU steel companies to keep a strict watch on such malpractices. I request other producers to keep a similar watch on their retail and distribution network,” he told the steel makers.

Steel ministry secretary Raghav Sharan Pandey pointed out that the government had no option but step in when prices started rising abnormally.

Taking a dig at Muthuraman, he said, “That government is the best which governs the least. If we did nothing, prices would have shot up by Rs 10,000-15,000, and this would have made our industry happy. Despite increase in raw material prices, some companies still have 20 per cent EBIDTA (earnings before interest, depreciation and taxation) margins in June.”

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