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| Steel firms prepare to ease prices on market signals |
| Ishita Ayan Dutt / Kolkata May 19, 2010, 00:01 IST |
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In what could mark the end of a bull run, flat steel producers are looking to roll over and even cut prices from June.
Euro weakness, correction in international prices and an unusual inflow of material in the domestic market have led to the softening of steel prices. As things stand now, the list price of flat steel—used in automotive and white goods— could be reduced from June, or the companies could opt for significant discounts.
Neeraj Singal, managing director, Bhushan Steel said, the company would drop prices by Rs 2,500-3,000 from June. The levels of $800 a tonne for hot rolled coil (HRC) never got absorbed in the market. “We increased prices by about $100 a tonne in April, which will be rolled back.”
Producers indicated that the inventory levels at Shanghai were high at about 1.7 million tonnes, which could have added to the sentiment. Chinese domestic HRC dropped sharply by about $29 a tonne.
Steel Authority of India Ltd (SAIL) chairman, S K Roongta, recently indicated that the last 2-3 weeks had seen a downward correction of $50-$70 a tonne.
Vinod Garg, director-marketing, Ispat Industries said, capacity utilization had picked up in the global markets.
According to World Steel Association (WSA) figures, crude steel production for the 66 countries reporting to the association was 120 million tonnes in March, 30.6 per cent higher than March 2009.
Domestic producers are also concerned over the surge in imports. Flat steel imports into India during April are up 57 per cent year-on-year and 27 per cent month-on-month, led by the surge in imports of HRC, HR Sheets and cold rolled (CR) coils and sheets. China continued to dominate the import scene, accounting for 40 per cent of total flat steel imports into India. In case of HRC and sheet imports, the percentage was as high as 63 per cent.
Also, the cost push has eased to some extent, with spot iron ore prices dipping by about 15 per cent since April. Coking coal prices have eased today marginally.
An HR producer said, even if rack rates were not brought down, discounts would be given as traders were playing spoilsport.
“The seasonality has to be factored in, as well. India is heading for monsoons, which is off-season. As of now, there is no change in prices, but we still have about 12 days to June,” said, Ankit Miglani, director-commercial, Uttam Galva Steels, CR and galvanized steel producer.
However, producers are not worried. “If it stays at $700 a tonne level, then it’s still a good price,” said Singal. Steel prices have increased 28 per cent during December to March with HRC at 34,000 a tonne.
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