Primary steelmakers to offer preferential pricing to MSMEs

MUMBAI: Indian primary steelmakers have introduced new schemes to supply steel at preferential prices to micro, small and medium enterprises (MSMEs), amid complaints from MSMEs and the Engineering Export Promotion Council (EEPC) about rising price of the raw material.

JSW Steel, Tata Steel and Jindal Steel and Power Ltd have introduced exclusive pricing schemes for MSMEs, while ArcelorMittal Nippon Steel (AMNS) said that they always supply steel at export-parity prices for MSMEs.

State-owned Steel Authority of India and Rashtriya Ispat Nigam are in the final stages of approving similar schemes, while other steelmakers are also expected to follow suit, industry executives said.

These schemes follow a notification from the Department of Commerce in October to all primary steelmakers, asking them to supply steel at export-parity price to MSMEs and exporters of engineering products, EEPC executive director Suranjan Gupta said. The council, he said, had written to the department on rising steel prices in the domestic market.

This is essentially a step towards implementing the notification and other steelmakers will follow that, Gupta said.

The notification, sent to all the primary steelmakers on October 1, demanded that they supply around 1 million tonnes of hot-rolled coil, cold-rolled coil, wire rods and bars to engineering products and MSME exporters. This was intended to help exporters who need small quantities of steel to source it from the domestic market instead of importing it.

MSMEs can now approach stockrooms of JSW Steel to place orders for quantities based on their needs.

“JSW Steel’s view is that we want this segment to grow. Through this initiative, prices for them will be slightly lower compared to prices in the local market. MSMEs’ requirements are small in nature; for them to be able to access that in time in the desired quality and at the right price is what is key,” said Jayant Acharya, JSW Steel’s director of marketing, commercial & corporate strategy.

This will help engineering exporters and other MSMEs to compete in the international market, Acharya said. “MSMEs usually require around 20-100 tonnes of steel, which when imported takes time to reach them. However, JSW will enable them to get the smaller quantity, at the same prices,” he added.

ArcelorMittal Nippon Steel has a programme in place whereby it is supplying steel to MSMEs at export-parity prices, the company said.

Jindal Steel & Power said it had introduced a price-protection scheme from November 1, exclusively for MSMEs.

“We have a fixed price on steel for MSMEs for 90 days, which will not go up if the prices in the market move up. However, we will pass on the benefit if the prices come down,” managing director VR Sharma said. The prices are negotiable after 90 days, he added.

SAIL, RINL didn’t comment.

Meanwhile, engineering exporters are yet to reap the benefits as JSW’s scheme is not completely operational on all the products.

“The initiative is yet to kick off. We have requested the company to give us pricing details on long products like wire rods and rounds, but it is not yet received,” said Pankaj Chadha, who owns an engineering product manufacturing facility in Mumbai and is the iron and steel head at EEPC.

Requirement forms for wire rods and bars are sent to JSW which we haven’t received. SAIL and RINL are in the final approval stages of approving the scheme, said Chadha. “However, if the companies give us the prices which are equal to international prices and cheaper than domestic prices, this scheme will be a big hit,” he added.

“We appreciate this initiative by JSW Steel. We want other steelmakers too to implement this. However, we haven’t received any pricing details on wire rods which is what we mostly import,” said another MSME engineering exporter based out of Delhi.

Primary steelmakers to offer preferential pricing to MSMEs Primary steelmakers to offer preferential pricing to MSMEs Reviewed by TechCO on 11/24/2020 Rating: 5

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