Inventory levels of domestic steel companies have started shrinking reflecting pick-up in demand since the beginning of the month, much to the relief of manufacturers hit by slowdown.
Inventories started piling up to an uncomfortable level for many firms also as a result of lower demand from consumer goods, additional capacity build up and increased imports during the monsoon and the ongoing festive season.
However, the trends in both demand and price front have reversed from the beginning of this month.
"There has been a brisk demand for the last few days -- from the beginning of the current month. Inventory has come down. Sales have picked up -- both for HR and long products," country's largest steel maker Steel Authority of India (SAIL) Chairman C S Verma told PTI.
According to a report by Joint Plant Committee, a Steel Ministry body, inventory with steel manufacturers, at the end of September, was 2-3 times of the stock that they were carrying at the end of March this year.
SAIL was carrying an inventory of four lakh tonnes at the end of March, 2012.
However, SAIL Chairman denied holding an inventory beyond the level of 10 lakh tonnes, at any point of time, saying, "We never had one million tonne inventory. That's a misnomer. You can't sale semis in the market."
Verma also said domestic steel prices have started increasing by $10 a tonne in the last few days in sync with international price.
Private sector steel makers also echoed Verma's view onm price rise.
"Steel prices likely to go up soon as demand is picking up ," a top official of a private sector steel maker said.
Apart from capacity addition and subdued sales, a major reason for rising inventories for domestic steel manufacturers was growing imports.
"Imports have risen by 33.7% in the first six months of 2012-13 against the same period last year. Countries like Japan, Korea and China which are major suppliers of steel to India have increased their sales even above the average of 33.7% of total imports," the report said.
India had signed FTA with Korea in January 2010 and with Japan in August last year. Under FTA, duties on most of the products, traded between the countries, are either eliminated or reduced sharply.
India's steel import stood at 6.83 million tonnes in 2011-12.