Steely Stance Committee of Secretaries on Prices will decide today on complete ban New Delhi, July 8:
Frustrated by the continuing contribution of the rising prices of iron ore and its products on the inflation index, the Committee of Secretaries (CoS) on Prices will take a call tomorrow on a slew of measures, including a ban on their exports, to tame the prices.
Sources said that the steel ministry has been asked to submit a list of options to increase the domestic availability of the primary article, failing which the steel producers would have no choice but to raise their product prices that they have promised to hold until August.
Export duty on iron ore was enhanced mid-June to a uniform 15 per cent from specific rates based on iron content. However, that failed to improve the domestic supply and douse the flared prices as export prices have continued to climb due to a strong demand from China.
Sources said that while the finance ministry is in favour of raising the duty to not less than 25 per cent, the steel ministry is harping on an export ban or capping the exports.
A review by the CoS last week using January 2008 as the base showed that inflation rose by 8.5 per cent in the 23 weeks of the current year. While iron ore was one of the four primary articles to contribute to the increase in inflation, six out of the eight articles in the manufacturing sector belonged to the iron and steel sector.
“The analysis of inflation trends with reference to January 2008 as well as with reference to last year confirms that inflation is primarily commodity-centric,” says the minutes of the last week’s CoS meeting where it was decided to tighten the screws on iron ore.
The meeting also decided to keep “suitable policy measures” for steel sector ready for implementation in early August when the deadline given by major producers to hold their prices for three months is scheduled to expire.
There is an option to further raise the export duties on flat and long steel products if prices are not kept in check.
The CoS will also consider a proposal on the use of conveyer belts for cement imports from Pakistan as movement through train has marginally improved to three rakes per day from earlier two. Cement prices have been so far stable due capacity expansion by the domestic manufacturers.
Trends in sugar prices, which rose by 5 per cent in the week ending June 14, and its availability, would be brought to the notice of the CoS but no measures are expected to be taken.
15 per cent
Export duty on iron ore which was enhanced mid-June from specific rates based on iron content
25 per cent
The duty finance ministry wants on iron ore export
•Steel ministry says either ban iron ore exports or cap them
•Iron ore was one of the four primary articles to contribute to theincrease in inflation
•Six out of the eight articles in the manufacturing sector belonged to the iron and steel sector
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