Steel prices are shooting up, but no government intervention expected
April 13, 2010
With steel prices skyrocketing in domestic and international markets, the attention is now on the steel ministry. However, the government is not likely to intervene, at least in the short term.
“Right now, we are watching the situation. However, we cannot give any legal diktaton an upper limit for steel prices. The only option available is that we can start a dialogue with the parties involved. However, we have not started any such process as yet,” said Atul Chaturvedi, joint secretary, steel ministry, when Moneylife questioned him on the government’s stance on rising steel prices.
However, research firm Enam Securities feels that the government may intervene. It said in a note, “We believe (that) the government could intervene to cap steel prices and tax iron-ore exports to combat inflation, as they did in 2008.”
The note further stated that steel prices have gone up by Rs4,000 per tonne over the past 15 days and another hike of Rs3,000 per tonne would be required to neutralise the cost impact for non-integrated producers.
Mr Chaturvedi also added that the government is now watching the situation. Even in the future, if the Centre does take a stance, it can only hold a dialogue and no legal diktats could be passed, he said. — Amritha Pillay