Secondary steel cos to cut prices by Rs 4K/t

Steel Secretary, RS Pandey, said secondary companies will cut flat product prices by Rs 4,000 per tonne, reports CNBC-TV18 quoting Newswire 18. Secondary companies will hold reduced prices for three months, he added.

According to Pandey, the price cut by major steel companies is 'unconditional', He further commented that secondary producers requested the government to rollback export duty. Price cuts are applicable only for the domestic market.

Secondary steel companies include Uttam Galva and Bhushan Steel .

“We met the secondary producers of flat products. Like the major producers have done, they have also agreed to cut the prices of their flat products by Rs 4,000 a tonne. The companies we met are users of flat products: Bhushan Steel, Maharashtra Seamless, Jindal Saw Pipes and they represent the entire range of cold rolled producers. They have also assured that in order to improve the domestic supply situation, they will import raw materials, process it and export under advance licensing scheme. Whatever HR coil is sourced from domestic markets will be processed and go to the domestic market in the form of processed products. We will ensure that there is no domestic shortage and prices are kept under check,” said RS Pandey.

“Secondary producers have assured us that they will export only to the extent they get raw materials from abroad. So, against imported raw materials they will be exporting finished products and so there will be no shortage. Whatever HR Coil source from the domestic market, from the domestic supply they will process and the processed product will be sold in the domestic market,” he added.

According to Latha Venkatesh, RS Pandey stated that the government will re-think the export duty. The government is expecting steel producers to exercise restraints on exports. Secondary steel producers are being held as an example whereby they have said that they will only export to the extent they import. So, value addition on imports will be done for the export segment and raw materials sourced from India will not be exported in their value-added form.

There is a moral pressure on steel producers not to export. If they export, then there is a duty at the moment. So, the rethink is coming in with some very heavy conditioning and provisions that they will voluntarily exercise restraint and not export. At the moment, the steel producers have given in, secondary as well as primary, in terms of price. The government has not given up its right or decision to have a export duty and thereby control exports mandatorily. So, the steel producers are a bit under the weather at this point in time but the stock prices are not reacting just yet.