Indian steel firms pledged to cut prices of steel pipes and tubes by 10% to help fight inflation, a senior government official said, helping their stocks tumble by up to 12%.
RS Pandey, a secretary at the steel ministry, added that steel exports had fallen sharply from a year ago, boosting local supplies and raising hopes prices could stabilise.
The government has arranged a meeting with steelmakers to persuade them to lower prices, which have continued to rise despite an earlier vow from top producers to hold rates.
"Steel pipe and tube manufacturers have agreed to reduce prices by 10%," Pandey said after the meeting.
He added the government would take action against retailers and others hoarding steel products and fanning inflation, which raced to a 13-year high of 11.42% in mid-June.
Shares of major steel firms such as state-run Steel Authority of India, Tata Steel, Ispat Industries and JSW Steel were down 7-11.7% in a weak Mumbai market whose benchmark index had fallen nearly 4.5%.
Prices of steel, fuel and food have pushed up India's inflation to double-digit levels, and the government has been repeatedly asking firms to cut prices and lower exports.
"Exports are declining. Exports have to decline further. Industry's aim is also to cut exports," Pandey said.
Steel exports in the first quarter of the 2007-08 fiscal year stood at 1.3 million tonnes, Pandey said, but had dropped by a million tonnes in the same period of this year.
"Availability of steel will go up by five million tonnes this year due to fall in exports and capacity additions by steel companies," Sajjan Jindal, the Managing Director of JSW Steel, told reporters after the meeting.
"Last year's steel exports were at four million tonnes, and I believe this year it will be 2.5 million tonnes."
Provisional data from Joint Plant Committee, an official body, showed India's steel consumption rose by 10.7% in 2007-08, while production growth was slower at 5.1% and the gap was met through 7.18 million tonnes of imports.
By Mayank Bhardwaj, Reuters
