India’s regulatory body, the Competition Commission of India (CCI) has initiated a suo moto probe into alleged cartel among Indian steelmakers to hike the price of steel in the domestic market, according to local media portal Moneycontrol.
The move come after India’s Road transport and small industries (MSME) Minister Nitin Gadkari’s warned steel companies to reigning in steel prices that have soared to slow down infrastructure projects in the country. CCI will ascertain if such a cartelization has taken place.
Since the easing of lockdown restrictions, steel prices have headed north driven by economic recovery in India and China. Some steelmakers, especially secondary steel producers, have attributed the rise in prices to the increases in input costs, which include higher ferrous scrap and iron ore prices.
The Indian government has maintained the stance that most steel producers have captive mines so their raw material prices are stable, hence a price hike is unjustified. This rationale is only applicable to primary steel producers including Tata Steel, JSW and Sail, but for several medium and small scale secondary steel producers, the spike in ferrous scrap prices and steel semis has squeeze margins considerably forcing them to hike prices.
Last week, government reduced customs duty and waived-off anti-dumping duties on certain steel products in a bid to lower input cost of downstream steel products manufacturers, who are suffering due to high iron and steel prices.