India: Govt intervention brings steel price relief for MSME users

Government intervention has brought down steel prices for the downstream medium, small and micro enterprises (MSME) sector recently by INR 2,000-3,000/t.

Speaking at a press conference on the sidelines of a national conference on "Making India Atmanirbhar in Steel: Role of Secondary Steel Sector" in New Delhi on 27 March, 2022, Steel Minister Ramchandra Prasad Singh said that government intervention has helped reduce steel prices for the MSME user sector.

Explaining why steel prices have shot up, he said: "Russia exports of 30-40 mnt and Ukraine's 15-odd mnt of steel exports have been affected. EU, West Asia, African countries have been affected and global prices have risen 5-7% since the war. However, this price rise is beyond our control. But we sat with the primary mills to tell them to lower prices. Not for all downstream sectors but at least for the MSMEs."

The minister said the mills agreed to give a discounted price to the MSME sector. They agreed to drop prices by INR 2,000-2,500/tonne or even up to INR 3,000/t.

Post-1991, steel has become a de-regulated sector. In such a scenario demand-supply determines prices, while global prices also influence India's domestic prices although the latter is cheaper compared to the former. The minister said there are two factors at play here. "One is that steel is a deregulated sector. At the same time, government infrastructure projects are also getting impacted. So we also have to see how prices and demand can be balanced," he said.

Coking coal supply from Russia affected

Dwelling on coking coal sourcing from Russia, the minister said, "There is no 'disruption' as such but 'smooth supply' is being affected."

At present, India is sourcing around 70% of its coking coal from Australia. Singh had visited Moscow in October last year to sign an MoU with Russia where it had been decided that by 2040 India would be sourcing around 40 mnt of coking coal from Russia. "We are moving towards that direction but because of the Russia-Ukraine war, there will be definitely some problem but we will sort it out," he said.

Around 4.5 mnt of coking coal was imported in financial year 2021-22, as per ministry sources.