Steel prices soften on domestic inventories

JSW Steel and Ispat Industries cut prices by around Rs 500 a tonne.

Leading steel producers have cut flat product prices by Rs 500 a tonne. This comes in the wake of a deluge of cheap imports and softening of steel prices in China.

JSW Steel and Ispat Industries have cut prices by around Rs 500 a tonne with effect from November 1, while Essar Steel is yet to take a decision on this. Steel Authority of India Ltd (SAIL) executives refused to say anything on the issue when contacted today and Tata Steel executives were not available for comments.

Seshagiri Rao, director (finance), JSW Steel, said the company had increased flat product prices by Rs 500 a tonne on September 1, a move now being corrected.

He said the pressure on prices was coming from China where Baosteel, the Chinese market leader with a 21-million-tonne production capacity, cut prices by around $100 a tonne in September.

"The prices were being aligned with the international market," he added.

Moreover, there has been a deluge of cheap steel imports. Industry sources said even after the price cut, there was a difference of Rs 500 a tonne between domestic prices and import prices. The imports were mainly from Russia, Ukraine and Romania.

In the first half of the current financial year, hot rolled coil (HRC) imports increased by around 140 per cent and were to the tune of 1.1 million tonnes. HRC import prices were anywhere between $340-$350 a tonne.

An Essar Steel spokesman said, "We have not decided on a price cut and will take a call over the next couple of days."

The flat product price drop came after a price cut in long products. Long products major Rashtriya Ispat Nigam Ltd (RINL) has cut prices by Rs 1,000 a tonne, in view of the cheap imports from China and Ukraine.

Even after the price correction, the gap between the prices of imported products and domestic products was around Rs 1,000 a tonne.The most affected categories in long products are rebars and wire rods.

China, lapping up steel from across the globe over the last couple of years, has turned a net exporter. China's own production is to the tune of 290 million tonnes while consumption is at 250 million tonnes.