Companies also fear a price war, expecting huge import from Russia.
Steel companies have been asking central government-run NMDC to lower its iron ore prices, in line with the sliding global levels. They say it is becoming increasingly difficult for them to keep product prices at current levels, amid sluggish demand and rising import from China and Russia.
“If the cheaper imports from China and Russia continue unabated, it will cause irreparable to damage to the Indian industry, unless the government comes out with policy initiatives to arrest this and to lower ore prices in the domestic market,” said a spokesperson from Essar Steel.
A 50 per cent depreciation in the Russian currency has boosted its export to India. “There is a possibility of Russian steel entering India in a big way in the coming weeks. (Then), there is going to be a huge price war,” said a Mumbai-based trader.
Traders have been refraining from booking orders from China for a couple of months, as by the time the material lands here, prices fall.
“We are still to make any decision regarding price revision of steel products for February. On Saturday, we will be reviewing the situation and then take a call,” said a source from Rashtriya Ispat Nigam. Calls to Steel Authority of India and Tata Steel were unanswered.
The high cost of ore is also an issue for companies not in a position to import directly.“We are under tremendous pressure to lower steel product prices, as the difference between imported and domestic products is about 20 per cent,” said R K Goyal, managing director of Kalyani Steels. “If NMDC does not lower prices, we might have to look at lowering capacity utilisation as an option.”
Citing scarcity of ore in the domestic market, NMDC has not been reducing prices.