Ispat move on price cut on June 1

Steel major Ispat Industries will take a call on price cut on June 1, in the light of a $100 per tonne drop in international prices and a $50 per tonne price difference with imports coming into the country.

Speaking on the sidelines of an extraordinary general meeting of the company, Vinod Garg, executive director (marketing) Ispat Industries said, international prices had softened and domestic prices could soften in the immediate term.

Cheap imports making way into the domestic market were hovering around $550 per tonne.

Garg said, it was likely that imports of hot rolled coil (HRC) could cross 2.5 million tonne, as opposed to one million tonne. During April-May, imports were to the tune of three lakh tonne.

He said, domestic prices should move in tandem with import prices. Trade sources said, if Ispat Industries reduced prices, then other companies were likely to follow suit.

However, Garg also said, while prices could drop in the immediate term, they would stabilise around $550 per tonne.

There was strong demand from China, which had set a target of 320 million tonne consumption for the year. Ispat Industries exports 20-25 per cent of its output to China.

Ispat's production was at 2.4 million tonne, which was expected to go up to 2.7 million tonne by 2005-06. This could translate to a 25 per cent growth in topline and bottomline of the company.

Garg pointed out, despite softening of steel prices, prices of input materials like iron ore, pellet, coke, had not come down.

In the secondary market, long product prices were showing signs of weakness, prices sliding by Rs 1,500-2,000 per tonne. Industry sources said, prices have dropped by Rs 1,500-2,000 per tonne, across long products. Channels, which were enjoying premium of Rs 400-500 per tonne in the market, were also on a downtrend.

Peter Marcus, managing partner, World Steel Dynamics recently said in Kolkata, steel prices were headed downwards and would drop by $100 per tonne by the third quarter of the year.

He said, prices across the globe were showing signs of weakness and would bottom out by the third quarter, after which they would again start picking up.