 "Rise in imports might impel steel price cuts")
Increasing pressure from cheaper Chinese primary steel imports could prompt domestic producers to slash product prices for April, say analysts and industry officials.
“The $30-$40 a tonne difference between prices globally and in India makes import viable for traders and consumers,” Clement Kwok, associate editor of Platts, a premier source of benchmark price assessments for metals, told Business Standard.
From the latest data from the Union steel ministry’s Joint Plant Committee, imports of hot rolled coil (HRC) from China for all but the last month of the 2013-14 financial year rose 14 per cent from the same period last year, to 208,000 tonnes. These Chinese imports contributed to 21 per cent of the total HRC import during the year.
“Globally, steel prices have declined by five to seven per cent,” said an analyst with a local brokerage. “Appreciation of the rupee against the dollar is another factor that is supporting a price cuts decision for April, as it will bring down production costs.”
Domestic primary steel producers have, however, been raising product prices for the past three months, citing rising input costs. Last month, they justified their stance by saying the price levels after revision were the same as in 2012.
“Price is always connected with demand. Even if price levels now are the same as in March 2012, the demand scenario has weakened drastically, since five to six million tonnes of new capacity has come into the market,” said the analyst quoted earlier. “So, a price cut should happen.”
“There is enough room for producers to slash product prices, as demand has declined. They will have to do so this time,” said Giriraj Daga, senior analyst with brokerage Nirmal Bang.
Apart from general economic slowdown, domestic demand for steel has also been weak ahead of the general elections, with market participants staying away from purchases until political stability ensues, said dealers and traders.
Apart from China, Japan and South Korea are the other two sources of imports Indian traders are considering. Importers usually prefer flat steel products from Japan and South Korea and look at Chinese import for long steel products. Flat steel is normally used in the automobile industry; long products find wide application in the construction segment.
Some producers, however, say it’s too early to consider a price cut. An Essar spokesperson said, “The input cost continues to remain firm. Price levels in India are in line with global prices and in some cases, lower than import parity prices. The demand is stable. Hence, prices will continue to remain at present levels.”
“The $30-$40 a tonne difference between prices globally and in India makes import viable for traders and consumers,” Clement Kwok, associate editor of Platts, a premier source of benchmark price assessments for metals, told Business Standard.
From the latest data from the Union steel ministry’s Joint Plant Committee, imports of hot rolled coil (HRC) from China for all but the last month of the 2013-14 financial year rose 14 per cent from the same period last year, to 208,000 tonnes. These Chinese imports contributed to 21 per cent of the total HRC import during the year.
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Ankit Miglani, deputy managing director, Uttam Galva Steels, said: “Demand is weak and the pace of US recovery has also come down; plus, there is problem in China. This could lead to a drop in price next month.”
“Globally, steel prices have declined by five to seven per cent,” said an analyst with a local brokerage. “Appreciation of the rupee against the dollar is another factor that is supporting a price cuts decision for April, as it will bring down production costs.”
Domestic primary steel producers have, however, been raising product prices for the past three months, citing rising input costs. Last month, they justified their stance by saying the price levels after revision were the same as in 2012.
“Price is always connected with demand. Even if price levels now are the same as in March 2012, the demand scenario has weakened drastically, since five to six million tonnes of new capacity has come into the market,” said the analyst quoted earlier. “So, a price cut should happen.”
“There is enough room for producers to slash product prices, as demand has declined. They will have to do so this time,” said Giriraj Daga, senior analyst with brokerage Nirmal Bang.
Apart from general economic slowdown, domestic demand for steel has also been weak ahead of the general elections, with market participants staying away from purchases until political stability ensues, said dealers and traders.
Apart from China, Japan and South Korea are the other two sources of imports Indian traders are considering. Importers usually prefer flat steel products from Japan and South Korea and look at Chinese import for long steel products. Flat steel is normally used in the automobile industry; long products find wide application in the construction segment.
Some producers, however, say it’s too early to consider a price cut. An Essar spokesperson said, “The input cost continues to remain firm. Price levels in India are in line with global prices and in some cases, lower than import parity prices. The demand is stable. Hence, prices will continue to remain at present levels.”