The headlines read like a used car lot: “They’re cutting back prices!”
But this time, there aren’t cars on the block — and the price cuts could affect those in the metals industry, at least in India. After meeting with Indian Prime Minister Manmohan Singh in New Delhi, leading steel makers in India decided to cut the price of flat products, rebar, and structural steel, due to the claim that current steel prices increase inflation. These new and improved prices, agreed upon this Wednesday, will be prominent for the next three months.
To understand the consequences of this arrangement, which affects both Indian companies that use steel and the Indian manufacturers that increased prices in April, Times of India reports that “the current price of flat products is around Rs 45,000 per tonne. The reduction will lead to a 10% price cut.” In addition, “Price of downstream products will also be cut, even if their prices were not increased in the last two months.”
Don’t get too excited, though. These price cuts are only relevant for steel used in India, so exports need not apply. However, there are some other twists, which you can read online in The Hindu: “On its part, the Government has also assured steelmakers that the notification on export duty on steel, which was announced by Finance Minister P. Chidambaram as a measure to tame inflation by facilitating higher domestic supplies, would be put on hold … while the industry also sought an ad valorem export duty of 15 per cent on iron ore so as to conserve the mineral for steel production and meeting the basic raw material needs for expansion in capacities … Also, the industry noted that the procedure of auctioning of manganese ore and iron ore by MOIL and NMDC should be stopped as it was leading to speculative pricing in the domestic market.”