Steel prices in India set to go down, says government

New Delhi, Oct 5 (IANS) India's steel sector is due for a boom phase that will lead to prices falling, said a key member of Prime Minister Manmohan Singh's cabinet here Sunday.

'Steel prices in India will go down,' Steel Minister Ram Vilas Paswan told reporters on the sidelines of a function here, and attributed it to the India-US civil nuclear co-operation agreement.

'The domestic steel sector will benefit immensely from the nuclear deal, as the availability of energy in adequate amount would lead to a boom in the infrastructure sector,' he said, and explained: 'A boom in the infrastructure sector will benefit India's steel sector immensely, which is doing extremely well.'

The minister also said there has been no increase in steel prices since May, and that prices would moderate now.

Paswan, who earlier chaired a meeting of the fertiliser advisory forum as the country's chemicals and fertiliser minister, did not specify any time frame for the steel prices coming down.

A month ago, Paswan had spoken about steps to maintain the steel prices if needed.

His observation Sunday once again showed the government's unwillingness to allow the steel firms to go for an upward price revision after their three-month voluntary moratorium on price revision ended Aug 7.

Though in India, the government does not fix prices, the major steel producers normally do not go against the state's wishes, given the say of public sector firms like Steel Authority of India Ltd (SAIL) in the market.

Steel secretary P.K. Rastogi Aug 22 had told reporters here that there was no scope for an upward revision in the prices of steel products, and had instead called for a reduction following softening of global prices.

'Since global prices of steel are softening, we do not see any immediate reason to go for any upward revision. Instead, the companies should think in terms of further reduction in the prices of steel,' Rastogi had said.

The steel manufacturers at a meeting with Prime Minister Manmohan Singh here May 7 agreed to reduce prices of flat steel products by Rs.4,000 a tonne and that of structural steel by Rs.2,000 per tonne.

They also agreed not to revise prices for the next three months.

India intends to expand steel production to 124 million tonnes by 2011-12 from 55.26 million tonnes in 2007-08.