The government has permitted usage of steel developed by secondary steel makers for building of highways. Earlier, road developers had been expected to use steel developed only by the principal steel producers in highways building.
The move comes in the wake of increasing rates of steel supplied by principal steel makers. Minister for road transport and highways Nitin Gadkari has been vocal as significant steel corporations had been on the price tag hiking spree for the final handful of months, primarily taking cues from their international peers.
While Gadkari took the matter to the Prime Minister looking for his intervention, steel firms justified the price tag hike to increasing rates of iron ore.
Gadkari’s issues had been partly addressed in the Budget for 2021-22 in which steel imports had been produced less difficult by lowering customs duty on a variety of goods and granting duty exemption on import of steel scrap, applied by secondary steel makers.
According to India Ratings, domestic hot rolled coil (HRC) rates (Mumbai 2.5mm-8mm) inched up 45% year-on-year and 3% month-on-month to Rs 57,000/tonne in mid-January 2021. India had developed 103 million tonne of completed steel in 2019-20 out of which about 45% was developed by the secondary steel producers.
Apart from reining in the integrated steel makers from jacking up rates additional, the most current move will also widen the scope of sourcing and will provide a cushion to the secondary steel producers who had been hit challenging by the pandemic.
“With this step, the supplier base for steel used in the construction of national highways would increase, leading to more competition and better price discovery by the markets. This is also part of the continuous effort by the minister to reduce costs through use of new technology, reducing restrictions on suppliers and making the procurement system transparent,” the ministry for road transport and highways mentioned in a statement on Sunday.
In view of the enhance in steel rates, which can effect the price of developing national highways, Gadkari had earlier recommended the will need to re-look at all circumstances which could be restrictive, without the need of impacting the high-quality of material applied for highway building.
In the statement, MoRTH mentioned all steel – irrespective of whether developed from ore, billets, pellets or melting of scrap – would be permitted to be applied for national highway building, as lengthy as it meets the requirements expected for particular grades of steel.
“The move is based on the analysis and discussions with stakeholders and also technical opinion,” it mentioned.
During the April-December period of the existing fiscal, India imported 3.21 million tonne (MT) steel, down by 42% more than the corresponding period final year. During December 2020, import decreased by 41.8% more than December 2019.