Though prices of various categories of steel products have increased in the aftermath of the minimum import price (MIP), it seems it will be difficult for steel producers to increase prices substantially and sustain the same as inventory of imported steel and materials in transit will be available in the market at least for next two months.
“Inventory of imported steel is there in the market while imports booked till February 5, 2016 will also come into the market without any duty,” a steel industry analyst told ISMW.
Moreover, what happens to the imports booked through revolving LCs (line of credits) is not very clear, feels the expert. Also, the user industries are not in very good shape to absorb any significant hike in steel prices. In case it that happens it will be inflationary too, as the government might not like that in the current context. Further, domestic steel producers are coming up with more capacities, which will itself prevent any substantial price hike.
“Also, the user industries are not in very good shape to absorb any significant hike in steel prices. In case it that happens it will be inflationary too, as the government might not like that in the current context. Further, domestic steel producers are coming up with more capacities, which should itself prevent any substantial price hike,” said the analyst.