The steel industry, which has hinted at a price cut next month, says the move will be a temporary phenomenon and prices are set to firm up again soon. Rising raw material prices and continued strong demand in the domestic market would lead to a rise in prices, say industry players. Prices of long product in the domestic market currently range between Rs 27,000 and Rs 29,000 a tonne. Long products are used mainly in the construction industry. Prices of flat products, used primarily in the automobile sector, stand at Rs 36,000-38,000 a tonne.
With quarterly raw material contracts being implemented and NMDC planning to double the price for new export contracts (targeting about a 90-100% hike), steel players are in no mood to reduce prices.
A Steel Authority of India official reportedly said that company might cut flat steel product prices by Rs 1,500-2,000 per tonne from June 1, as domestic inventory has piled up following rising imports.
However, HM Nerurkar, MD of Tata Steel, on Wednesday hinted at firming up of prices, which will impact 40-50% of its product line. ?Raw material prices are going up and in the next quarter, it will go up further. So, how can steel prices go down? In anticipation of the raw material prices, there was some increase which was more than what was required, but that balancing will be done,? he said.
Kirby Adams, MD and CEO of Tata Steel Europe, said the raw material prices would be the highest ever and steel prices are expected to remain firm in Europe during the first half of the current fiscal.
Industry players with whom FE spoke to agreed that prices are set for a correction next month as increase in imports has led to weakening of prices in the country. Domestic producers are faced with an import scare which has surged by 57% y-o-y and 27% m-o-m.
?The uncertainty in the European market and dumping of steel from China have led to fall in prices in the country. However, raw material prices have not fallen significantly, except for a small correction in spot prices of iron ore, which was the reaction of global uncertainty,? said Anil Surekha, executive director-finance, Ispat Industries. This would be a temporary phenomena and prices would increase, he said.
About 6 lakh tonne of flat steel had entered India in April, 40% of which was from China. Particularly import percentage of HRC and sheet was as high as 63%.
Analysts say, current imports are taking place at $600-650 per tonne CFR prices (this translates to Rs 29,000-Rs 32,000 per tonne) much lower than current market prices.
