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‘High bids not likely to hike commodity prices’

February 27: What kind of an impact will such high bids have on the prices of commodities? Will prices of steel, cement fertilisers etc rise?

While the general view is that prices of commodities will rise, one analyst told ICMW that if the cement manufacturers bid aggressively, the cost of production will also go up and inflate prices at the retail end for cement and this will apply to steel as well. This could make the ‘Make in India’ concept unviable, because products from China are still much cheaper than those from India.”

However, others feel that “it depends”. Commodities like steel, aluminium etc are all globally governed. In India, producers of such commodities also export and compete at a global level. And in countries like China, the GDP has reduced and there is overcapacity in manufacturing of steel etc. Coal imports have reduced in China in 2014 by 30 million over the previous year. Thus, there is a global surplus in coal.

Moreover, sources of energy like shale gas and renewable energy are also in focus. “So, pricing will eventually be due to a mix of such factors and not a function of the high bid prices per se,” said another source.