Finished steel inventory piles up in govt mills

State-owned steel companies are experiencing a spurt in finished steel and pig iron inventories , even as Tata Iron and Steel Company (Tisco) reduced its inventory of finished steel.

The crown jewel of the Indian steel PSUs, Steel Authority of India (SAIL), has seen a staggering 365 per cent hike in its inventory level in the past two months, from 119,000 tonnes on April 1 to 554,000 tonnes on May 30. However, in the same period, SAIL has managed to cut its stock of pig iron by 10 per cent from 21,000 tonnes to 19,000 tonnes.

Another steel PSU, Rashtriya Ispat Nigam Limited, has seen its stock of finished steel rise from 175,000 tonnes in April to 414,000 tonnes at the end of May, a growth of 136 per cent. It has fared similarly in pig iron, with levels shooting from 29,000 tonnes to 59,000 tonnes, a growth of 103 per cent in the 60-day period.

Indian Iron and Steel Ore Company Limited, which last week received a green signal for its proposed merger with parent company SAIL, seems to have followed the latter's trend, with finished steel inventory rising from 8,000 tonnes at the beginning of the current financial year to 13,000 tonnes at the end of May "� a 62 per cent hike overall.

Its pig iron inventory, too, has seen a moderate increase of 10 per cent from 38,000 tonnes to 42,000 tonnes. The stalwart among private Indian steel players, TISCO, has moved against the tide by cutting its inventory of finished steel by 2 per cent from 101,000 tonnes to 99,000 tonnes in the corresponding two-month period.

Steel analysts attribute the rise in steel inventories to "softening of international demand". Demand from China, they point out, is high but not up to expectations. "Domestic demand is still healthy. The rise in inventory levels, however, can lead to a further fall in prices.

But, there is no reason to panic," says an analyst.

The last few weeks have already seen a softening in steel prices and analysts expect a further price decline in the coming weeks.