Steel producers to cut prices soon, but only for now

A Rs 2,000 a tonne cut likely as China liquidates stocks.

Flat steel producers are likely to cut prices by around Rs 2,000 a tonne over the next few days. Reason: Stock liquidation in China and weakness in the European markets.

“Chinese traders have liquidated about 40 per cent stocks in the past month,” said a producer. Imports of flat steel — consumed by automobile and white goods sectors — in April were up 57 per cent year-on-year, with China accounting for 40 per cent. In case of hot rolled coil (HRC), the percentage rise was 63.

Domestic steel producers are taking stock and will decide the extent of the cut over the next few days. “The difference in prices between landed imports and the domestic price is Rs 2,000-3,000 a tonne,” said a producer.

Jayant Acharya, director (sales and marketing), JSW Steel, said there was a case for a downward price correction. “We will take a call in the next few days,” he said. Neeraj Singal, managing director, Bhushan Steel, said prices would be cut.

However, producers say the weakness is temporary, as demand is intact. Nippon Steel and JFE Steel, the Japanese producers, are planning to increase prices by more than $100 a tonne from July.“We might also revise prices upwards from July,” said a domestic producer.

According to World Steel Association estimates, China’s crude steel production for April was 55.4 million tonnes, an increase of 27 per cent compared to April 2009. This was also the highest in a single month. “The projection for the year is 660 million tonnes, so there should be no change in demand,” said an industry source.

This would be the first major price drop in flat steel after successive increases over the past few months. In April, some producers hiked prices by $100 (Rs 4,600) a tonne. Steel prices have been increased by 28 per cent from December to March, with HRC at Rs 34,000 a tonne.

Long steel, used by the construction industry, has been weak for a while. Since April, prices have corrected by about Rs 5,000 a tonne. It could see further correction, as with monsoons approaching, activities in the construction sector would be affected.

Prices may fall by Rs 1,000 a tonne next month: Secy

PTI adds: Steel prices may fall further by another Rs 1,000 a tonne in June due to a softening global trend originating from the financial crisis in Europe and demand slowdown ahead of the monsoons, an official said today.

Prices of long steel products — mainly consumed by infrastructure and construction firms — have already fallen by Rs 5,000 a tonne since April. “It may further fall by Rs 1,000 a tonne next month mainly due to the present European crisis and slackening demand ahead of monsoon,” Steel Secretary Atul Chaturvedi said on the sidelines of a conference in New Delhi.