RPT-UPDATE 1-India asks secondary steel firms to hold prices

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By Tamajit Pain

KOLKATA, India Aug 27 (Reuters) - Secondary steel makers should refrain from raising prices, India's junior steel minister said on Wednesday, but producers called for restrictions on iron ore exports to lower rising input costs.

The firms, which make products such as cold-rolled steel used in automobiles and pipes and tubes for the construction industry, have a combined output of 7 million tonnes a year.

"Government is aware that coal and iron ore prices have gone up, but it is our duty to ensure that inflation does not shoot up. Secondary steel makers should keep prices under check," Jitin Prasada told reporters at a steel conference in Kolkata.

"We are discussing with iron ore suppliers and steel makers ways to reduce costs."

He said the long-term solution was to increase steel making capacity, but the government also wanted to develop technologies to enable the more effective use of iron ore fines.

India's steel production is forecast to more than double to 120 million tonnes by 2010 from 55-56 million tonnes in 2008.

Industry officials, however, say the government should control iron ore prices and stop the export of high grade ore.

"Iron ore prices are hovering over 5,000 rupees ($117) a tonne. Government needs to control it to ensure low prices of finished product," Ashish Jhunjhunwala, managing director of Ramsarup Industries (RASW.BO), told Reuters by phone.

Vishal Agarwal, managing director of Visa Steel (VISA.BO), said the export of ores with more than 62 percent iron content should be banned.

"Duty on low grade iron ore exports should also be increased to 40 percent, from 15 now, to ensure domestic supply."