Vizag Steel firm on existing prices

Even as some of the steel majors in the country have reduced prices of their steel products by Rs 2,000 per tonne, Visakhapatnam Steel Plant (VSP) is determined on maintaining the existing prices of its steel products. This despite decline in sales during last month.

It may be recalled that steel majors including SAIL, Essar Steel, Jindal Vijaynagar Steel and Ispat Industries reduced prices of some of their steel products by Rs 2,000 per tonne recently due to the reduction in steel prices in the international market.

Accordingly, steel traders who have been selling VSP's products expected a similar slash in VSP steel prices too. But, the steel plant, which produces about 35 lakh tonnes of steel annually, has decided to stick to the existing prices of its steel products.

"Due to high prices, we witnessed a significant drop in steel lifting during May, which was actually a good month for selling steel. Keeping this in mind, other steel plants reduced their prices considerably. We expected a significant reduction in VSP's prices too. However, VSP reduced the prices only by Rs 300-Rs 350 per tonne," Krishna Rao, director of Vizag Profiles, a leading steel trading company, told Business Standard.

VSP hiked its products prices by Rs 1,500- Rs 2,000 per tonne from April 1, and by Rs 300-Rs 400 per tonne from May 1. Owing to this high steel prices, sales dropped significantly in May.

"Generally, we used to sell about 6,000 tonnes of steel a month. Though we expected our sales to touch 8,000-9,000 tonnes in May, we could sell only 3,000 tonnes in the last month," Rao said.

"On an average, we sell 3,500 tonnes of steel every month. We expected our steel sales to touch 4,500 tonnes in May. But because of abnormal prices, our sales came down to 2,500 tonnes in the last month," A Nagesh, managing partner of A S Steel Traders, told Business Standard.

VSP, on an average, sells around 2.75 lakh tonnes of steel every month. "Due to the recession, products lifting from VSP dropped by about 15.20 per cent in May. VSP has been selling majority of its products through LTC (long term contracts). It has already signed MOUs to sell its current year products at existing prices. So, there is not much need to reduce the prices to sell our products," VSP sources told Business Standard.

Moreover, other steel players reduced prices on flat products. But most of our products are only long products, which have great demand in the market, they added.