Hard bargain

New Delhi, July 18: A lobbying war has broken out over steel prices with small foundries demanding a degree of control after they were hit by a rise in flat product prices last month.

In the absence of price control, steel minister Ram Vilas Paswan, in the role of an arbitrator, today said he has asked his ministry to devise a strategy to check prices.

In this regard, discussions with private players have become necessary as they have a two-thirds share of the market, Paswan said.

Any price cut by public sector companies would have limited impact, if the private sector does not follow suit, the minister said.

The real beneficiaries in such a situation are the middlemen who profit from the price differentials between the PSUs and the private players, he said.

?We keep talking to the private players and last time we had a meeting they agreed to cut steel prices by Rs 2,000 per tonne,? Paswan said.

Officials feel moral suasion be used on the private sector to ensure steel prices do not rise further to scuttle industrial revival.

It is not only the private consumers that are complaining of high prices ? the government?s ambitious highway development programme and the rail corridor projects are also confronted with cost-overruns.

Government officials said if domestic prices continue to rise the finance ministry may step in to reduce the customs duty including that on scrap.

However, the recent fall in international prices is a relief to users as there is less of a leeway to leverage the gap between higher global landed price and domestic steel price. Producers have exploited the difference to raise prices of flats by Rs 1,500 a tonne last month.

Steel consumers, however, continue to carp over high input costs making their products uncompetitive globally, particularly in white goods and machinery.

They claim steel firms are profiteering from the bullish sentiments in the economy. Flat steel sales have been growing by about 11 per cent this year though long sales have been almost stagnant, going up by a little less than 1 per cent.

The consumers said the prices in the local markets have gone up by more than 100 per cent in the last two years compared with a rise of around 30-35 per cent in the global markets.

Last year, the government had taken note of consumer complaints and had forced steel makers to roll back prices marginally.

Steel makers, like Tata Steel, SAIL, Essar, Ispat and Jindals, however said the hikes were due to higher raw material costs in the last one year. Though steel makers rule out any rise, officials fear this is a possibility as the world?s largest consumer, China, is on an infrastructure building spree for the Beijing Olympics in 2008.