Elevated Prices: Big steel firms may offer discounts to select exporters

Elevated Prices: Big steel firms may offer discounts to select exporters

Integrated steel producers — both public and private — will likely soon offer a discount of Rs 2,500-3,000 per tonne to bulk consumers. These buyers include engineering goods exporters who manufacture finished goods for outbound shipments and small and medium businesses. The objective is to to soften the blow of elevated steel prices.

Sources told FE that steel companies may refund the discount amount each quarter. Commerce and industry minister Piyush Goyal is learnt to have informed industry executives of the discounts at a recent interactive session in Mumbai.

An over 70% spurt in steel prices since January 2020 has been a sore point with consuming industries – especially engineering goods firms that account for more than a fourth of India’s merchandise exports and construction companies. They have been seeking the government’s intervention in curbing steel prices.

Steel producers, however, have been highlighting a spike in their raw material prices and elevated demand to justify the rise in the metal prices. Global steel prices, too, have been on the rise, particularly since 2021, thanks to an industrial resurgence.

Major steel companies that FE contacted didn’t comment on the likely discount. While JSW Steel declined to comment, queries sent to Tata Steel and state-run SAIL on Tuesday didn’t elicit any response until the paper went to press.

The average wholesale price of the benchmark hot-rolled coil steel in Mumbai hit a record Rs 70,900 per tonne in November last year, up about 55% from a year before, according to the data compiled by SteelMint Research. However, the price since softened and ruled at Rs 66,500 a tonne in December 2021 (it’s hovering around that level now). Still, they were up as much as 72% from the January 2020 level.

Earlier, Goyal had convened meetings with steel companies and key organisation representing MSMEs and exporters in Delhi to firm up a solution to this issue.

Responding to a request to curb steel dumping from overseas, finance minister Nirmala Sitharaman told participants at an interactive session organised by Assocham this month that the government would have to balance the interest of producers with that of consumers. While she noted the concerns of domestic steel producers about dumping, she also highlighted bulk consumers’ demand to make the raw material available at reasonable prices.

Last year, road transport and highways minister Nitin Gadkari expressed concern about the surge in steel prices, saying “…when I am creating demand for steel and cement, the industry is creating a cartel and exploiting the people, which is very painful for me”.

Check the source here –Source, Financial Express.