Galvanised steel producers to cut prices by 5%

Amid falling raw material prices, aim is to pass on the benefit to consumers

Steel manufacturers will soon reduce galvanised prices by three to five per cent or  Rs 1,000–1,500 a tonne, thanks to a steep decline in raw material costs. “Falling raw material prices have reduced the cost of production; we will pass on the benefit to consumers,” said Ankit Miglani, deputy managing director of Uttam Galva Steels, India’s largest galvanised producer.

While steel prices have declined a marginal 0.5­1 per cent in the past month, the commodity has seen nine per cent decline in four months, due to weak demand from consumer industries.

Raw material prices have followed suit and the decline has been sharper in these. Prices of both pig iron and sponge iron have slumped 12 per cent and nine per cent, respectively. While pig iron closed at Rs 21,800 a tonne on Friday, sponge iron was quoted at Rs 19,700 a tonne in the Raipur (Chhattisgarh) market, a sharp decline from their respective levels of Rs 24,800 a tonne and Rs 21,700 a tonne on September 15, 2014.

Another raw material, zinc, has witnessed a slump of 14 per cent since September 2014 on low demand from consumer industries.

Galvanised steel is primarily used for large constructions, including bridges, tunnels and giant housing complexes. Zinc is used as a thick-layer coating on steel longs, making bars corrosion-resistant.

Galvanised steel producers follow the price movement of steel and zinc. Since both have witnessed a decline in recent months, producers will cut their basic products’ prices.

Primary steel producers have already announced a two-four per cent price cut to pass on the raw material price decline to consumers. Iron ore prices have hit a low, being traded at $58 a tonne ex-China.

With the government’s focus on infrastructure, the price cut across all steel and galvanised steel segments will provide a boost to the entire construction sector, said an analyst.