The fixation of a minimum import price (MIP) for a host of steel products on February 5 has been hailed by steel-makers of the country, but a section of consumers, particularly the exporters of engineering items or foundry products, are not amused with the spurt in domestic steel prices in the aftermath of the imposition of the measure.
The Indian government may recall the minimum import price after two months and before the expiry of its 6-month period if prices of domestic steel long and flat products continue to remain higher than their international counterparts, Ravi Sehgal, Senior Vice-Chairman, EEPC India, told ISMW.
According to Sehgal, the MIP will hit the exporters badly and that it will serve only the purpose of the local producers of prime steel and raw materials.
“We have got a feeler from the Ministry of Commerce that it will watch over the next two months (although the MIP is supposed to be in effect for 6 months) whether domestic prices keep on increasing at random. If the price increase sustains for 2 months, then the government is likely to withdraw the MIP before the expiry of the stipulated 6 months.” Sehgal claimed.
Sehgal said EEPC had recently made a presentation to the government highlighting how exporters have been affected by the surge in steel prices, but the Prime Minister’s Office (PMO) has shifted the whole issue to the finance ministry saying, the government also needs to protect its domestic players.
The government recently imposed the MIP on a large spectrum of steel products. The MIP ranged between US$341-US$362 on semi-finished steel, US$445-500 for hot rolled products, US$560 for cold rolled products and up to US$752 on some coated or treated products
“This measure (MIP) was to protect the domestic players from the surge in imports from China at much lower prices. But, in actuality, the domestic steel producers are using the MIP as a tool to increase their prices. Thus, domestic steel prices jumped up by Rs 1,500-2,000 per ton. However, that was not the intention of the government (to increase prices)," he said.
Prices have fallen after rising sharply but they are still much higher than the international rates. Downstream industries do not have a problem. It is only those players using the steel and adding value to the material who are in trouble, Sehgal said.