Steel: Handling Upswing

Handling Upswing The steel sector has been on something of a roller-coaster ride since the beginning of 2004. First, in response to the growing chorus from downstream user industries against the relentless steel price increase over the previous 18 months, the government announced a 5 per cent cut in peak customs duty on steel products to 20 per cent, and abolished the 4 per cent special additional duty. Then, China slapped a 55 per cent anti-dumping duty on imports from some countries. Although India was not included, this was seen as a warning to the domestic steel industry not to overstep the 3 per cent threshold limit that would trigger antidumping action. Simultaneously, an acute shortage of raw materials, especially metallurgical coke and coal, accompanied by sharp price increases in these inputs, pushed up the cost of production. Steel prices then saw further rises to reflect the higher costs, as well as rising demand. In order to force steelmakers to cater to domestic demand and check prices, the government froze export incentives and also slashed excise and customs duties on coke, steel and pig iron. The Indian Steel Alliance (ISA), a body of five leading producers, then agreed to cut prices by around Rs 2,000 per tonne, and to hold these prices till June. In spite of this agreement, SAIL, one of the alliance members, is reported to have once again hiked the prices of its long products last month.