Swati Khandelwal/ CNBC-TV18

Steel producers may consider a maximum retail price or MRP to check profiteering at the retail end. This was the result of a meeting the industry had with the steel secretary on Thursday. Worried retailers have already announced a 10% cut in prices.

Inspite of steel producers holding the price line, retail prices of steel have seen a 10-15% spike in June. So the steel secretary called producers in to discuss administrative action to check profiteering at the retail level. Producers say they will review distribution arrangements and even consider fixing a maximum retail price or MRP for all dealers and traders, which is currently not mandatory.

Sajjan Jindal, Vice Chairman & MD, JSW Steel India, said, “There is no transparent mechanism till date in most of the companies. Steel authority has this mechanism where at the district level there have this MRP concept. So in today's discussion it came out quite clearly that we as an industry should have MRP sort of a mechanism at the retail outlets from the small sellers.”

SK Roongta, Chairman, SAIL, said, “Dealers are supposed to sell material at a recommended MRP. We are monitoring that we will strengthen that and we'll try and sell more material through that channel so that people get at fixed price.”

The government’s warning seems to have worked. Retailers have agreed to cut prices of tubes and pipes from 53,000 Rs a tonne to 48,000 Rs a tonne, a cut of 10%. Steel producers will also act as quasi-retailers, to make small quantities of steel available. Errant dealers if found profiteering will be suspended.

RS Pandey, Steel Secretary, said, “My concern is that the retail prices must reflect the correct prices. If they do not, there could be export restrictions, there could be a crackdown on dealers, there could be some more administrative measures."

The export ban seems to be working. Producers say, supply in the domestic market be 10-15% more than last year. Steel exports in the first three months this financial year have dropped to 0.9 metric tonne from 1.3 metric tonne last year.