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Domestic primary steel producers have begun cutting prices, with the lead taken by JSW and Essar.
After raising prices for the past three months, a revision for April was seen as coming due to an appreciation in the rupee, which should trigger only a cut in prices, since the cost of imported raw material falls and the threat of import emerges.
JSW and Essar have cut prices of select products. Tata Steel has decided to raise those for rebars. State-owned Steel Authority of India (SAIL) has kept these unchanged.
“Considering the international prices and appreciation of the rupee, the company has adjusted domestic prices downward to align it with the landed cost of import,” Jayant Acharya, director (commercial and marketing) of JSW Steel told Business Standard on Tuesday. “Prices of hot rolled coils will be slashed by Rs 500-750 a tonne, while that of wire rods is being reduced by Rs 500,” he said.
An appreciation of rupee affects mainly commodity-grade steel products and not value-added ones. Due to this, the reduction is in select products this month, said an industry source. Prices of the remaining products, mostly value added, will be rolled over, he added.
Rupee appreciation brings down the import bill of coking coal, a key raw material in the making of steel.
“Essar Steel has also decided to marginally lower prices of only some products and rollover prices of its other products,” said a company source. “The company has revised prices for both OEMs (original equipment manufacturers) and the retail segment.
At Delhi-based Jindal Steel and Power, a decision is still awaited. Rashtriya Ispat Nigam could not be asked.
Steel producers have been raising prices for three months, citing rising input costs. In February, they justified their stance by saying the price levels after revision were the same as in 2012.
“The demand, too, is not strong in the domestic market,” said Giriraj Daga, analyst with Nirmal Bang brokerage. “This is another factor that must have prompted companies to slash prices for April.”
“Our (SAIL) price revisions are usually marginal and so we do not feel the need to cut prices for April. Last time, we had increased prices only by Rs 500 or so, which was not much,” said an official from SAIL, on condition of anonymity.
Tata Steel has raised prices of rebars sold under the brand name of TISCON. “The prices of all other products will be rolled over,” said a source.
