NEW DELHI, Oct 17 (Reuters) - Faced with falling prices, Indian steel makers said on Friday they would have to cut production by 30 percent and postpone expansion projects if import duties aren’t raised and an export tax eliminated.
Steel Minister Ram Vilas Paswan told reporters after meeting producers that his ministry would study a proposal to introduce a 15 percent import duty and scrap a 15 percent export tax as any production cut or delay in expansion would hurt the economy.
“We are sympathetic to their demands,” Paswan said at a news conference alongside steelmakers. “We should ensure production does not fall.”
India in April had allowed free steel imports and imposed a tax on exports to help tame rising prices that were contributing to soaring inflation.
Steel imports between April and September rose by 50 percent to about 3 million tonnes and local media reported mills fear dumping of cheap steel by China, Thailand and Ukraine.
Production growth in the five months to August has fallen to 4.2 percent, from 5.2 percent in 2007/08 and 12.8 percent in 2006/07.
Global prices have fallen more than a fifth from the year’s peak in June and July, hurting firms such as South Korea’s POSCO (005490.KS), the world’s No. 4 steelmaker, which has issued a grim business outlook due to slowing demand growth.
“If this situation continues, everybody has to reduce production by 30 percent,” state run-Steel Authority of India’s (SAIL.BO) chairman S.K. Roongta told reporters.
India aims to raise its steel production to 124 million tonnes by 2012 from 58.64 million tonnes currently.
“We want to make sure our expansion plans are as per plan,” Tata Steel (TISC.BO) Managing Director B. Muthuraman said. “If these (measures) are done, we can be sure we will not cut production, we will not delay budgets.”
Shares in Tata Steel closed 8 percent lower at 248.20 rupees in a Mumbai market that fell 5.73 percent. SAIL shares fell 4.6 percent on the day to 100.75 rupees. (Reporting by Mayank Bhardwaj and C.J. Kuncheria, Editing by Peter Blackburn)