Steel makers reduce prices by Rs 500-750/tonne

Stagnant demand amidst higher supplies forced almost all domestic steel producers to prune prices for the first time in the current fiscal ranging from Rs 500-750 a tonne providing some relief to end-use sectors.

"We have lowered the price by Rs 500-750 a tonne for the current month. Following this, the price of the cost of Hot Rolled Coil cost around Rs 36,000 per tonne," an official of a private steel maker said.

Hot Rolled Coil (HRC) is regarded as the benchmark steel product. As on September-end last year, the price of HRC was around Rs 38,000 per tonne.

The primary factors which acted as catalysts for pruning price are stagnant demand, higher domestic production as well as imports and drop in exports, the official said.

Continuing with subdued consumption trend for the last couple of years, India's steel consumption grew by just 0.3% to 31.17 million tonnes during the April-August period of 2014-15.

Imports have also gone up significantly in recent times for both flat and long products mainly from Japan, Korea and China. Construction sector accounts for around 60% of the country's total steel consumption while automobile sector consumes 15%.

While, imports of flat products, used in automotive and consumer durables sectors, from Japan and Korea were on the rise for quite some time now; an unprecedented rise in imports of long products, used in construction sector, have also been noticed in some time now.

"Because of higher imports at lower prices from China, we are facing a lot of problem on the price front. This is one of the factors forcing us to reduce prices. We never faced such kind of situation earlier," a senior official of a state-run firm said.

The official with the private sector steel maker added: "Exports are also falling. The primary reason here is the cost of raw material. While globally iron ore price have come down to its five-year low, it is yet to be reflected in India."

During the April-August period of the current fiscal, imports have gone up by a whopping 20.7% to a little over 3 million tonnes, while exports have come down by 8.8% to 2.3 million tonnes.

On top of all these, domestic producers are now producing at near capacity hoping a demand revival with the government's infrastructure initiative.

Steel consumption in India may go up by a "realistic" rate of around 3% for the entire 2014-15, Joint Plant Committee (JPC) Chief Economist A S Firoz recently said.