October 12, 2008

Some steel users terms price cuts as an eyewash

HT reported that some of the small and medium enterprises doubt that if the latest decision by the steel producers to cut prices would bring any immediate benefit to them. AS per report, they feel that steel prices have been slashed is steel categories mainly used by secondary steel manufacturers, who produce finished products like pipes and sheets.

The report cited Mr Naven Jain secretary of Uttar Pradesh Welding Electrodes Manufacturing Association as saying that "The price cut is just an eyewash. The steel companies had already taken an undertaking from us in April 2008 according to which we will have to buy steel at a determined price up to June 2008. The price cut would mostly benefit the construction sector, which uses large sheets of steel. It would not anyway have made any difference to us as there is no cut announced in the specialized steel that is required for manufacturing electrodes."

Mr SK Narula president of Phase I and II of the Naraina Industrial Association said that "Whether small scale industry benefits or not would depend on whether secondary steel manufacturers pass on the price cut to consumers."

SMEs said that they have seen prices of steel products they use rise close to 60% since December 2007. They added that the spike in input costs had dented their competitiveness against imports from China and hurt their profitability.