Steel Sector Delegation Meets Fm, Seeks Sops

A delegation of representatives from the major steel companies along with the union steel minister and the steel secretary met the finance and commerce ministers recently to appraise them about the highly depressed market conditions, and seek certain concessions to help improve the situation.

The delegation urged the government to provide sops to boost steel exports, bring about a trigger price mechanism, and either ban imports of steel, as has been done by Mexico, or introduce tariff barriers.

The steel industry is also examining the possibility of cutting production in an attempt to stabilise sharply falling prices.

The delegation has also sought an increase in the duty exemption under the Duty Entitlement Pass Book (DEPB) scheme. The delegation also once again voiced its demand for an higher duty on HR coil imports and protection against imports of defectives and seconds, top steel industry sources said.

It may be mentioned that the government has subsequently increased the Duty Entitlement Passbook Scheme exemption for galvanised sheets from 16 to 19 per cent. "It is important that a trigger price should be put in place so that if prices fall below that price, a duty barrier will be imposed so as to prevent dumping and maintain domestic prices," the sources said.

The steel majors are also looking at the possibility of cutting production unanimously in an attempt to maintain prices. "Recently, a steel major dropped its prices by a further Rs 500 per tonne for select bulk customers," sources said.

"With the continuous drop in global steel prices, the government has to step in to revive the industry. After all, this industry accounts for a total investment of Rs 60,000 crore," the sources said. "The steel industry also feels that the government could follow the example of Mexico and ban the import of certain categories of steel in an attempt to revive the domestic sector," the sources said.

Under the plan, Mexico's finance agency will set a reference price for the products that fall under sensitive sectors like textiles, steel and apparel. The price listed on the prior-to-import notification will then be checked against the reference price, and at the location of import, the prior-to-import notice will be considered invalid if the unit price being presented to customs on billing documentation varies more than five per cent from that set in the prior-to-import notice. Major steel companies like Essar, Jindal, Lloyds and Ispat have also decided to co-operate on key issues like pricing and production control, the sources said.

The steel industry, it may be mentioned, has been passing through a difficult glut over the last couple of years, and almost all steel companies have reported a loss in the first quarter of the current fiscal. In view of the current depressed steel markets, the financial institutions, too, have decided not to fund any more new projects in this sector.