Despite weakening demand, steel prices in India are unlikely to fall in January. Normally, steel makers revise prices on the first of every month.
Seshagiri Rao, joint managing director and group CFO, JSW Steel said, “There won’t be any price increases in January.” He said there is a month’s lag effect in international and Indian steel prices and though, prices have come off, internationally, from $720 (Rs 38,000) a tonne to $600 (Rs 31,620) a tonne, domestic prices continue to be in the range of Rs 34,000 per tonne. Ankit Miglani, deputy managing director, Uttam Galva Steel seconded the view. He said, “We are not seeing prices coming down in the near future. There will be more or less remain at the same levels as now.”
Essar Steel is somewhat optimist on the possibility of a price rise. The company, without elaborating, said, “The price outlook looks positive.”
However, the slowdown in growth for steel demand is a concern for steel makers. Rao said the steel production may end up at around four per cent higher than last year but that is nowhere near the projected 8-10 per cent growth. An industry official said, “Even though the demand has fallen to three per cent, it is still more than last year. There is definitely a case for rise but can’t comment now.”
According to the Joint Plant Committee’s data, the increase in real consumption of steel in April-November stood at 3.9 per cent, at 45 million tonnes. Total production in the period rose 7.9 per cent. Rao said, “Steel production might increase in the coming months but demand pick-up will take longer to revive.”
An analyst tracking the sector said, “The domestic demand is not robust at all, in fact, it is sloppy at the moment but the companies have been able to maintain prices because of the coking coal push.Fall in imports due to the rise in domestic production is also helping the companies in maintaining steel prices.”
November month alone saw a sharp rise in steel imports to the tune of close to a million tonne. Total imports from April-November stood at 4 million tonne as against five million tonne in the same period last year. The analyst said, “Steel imported in the month of November was booked in September. The rupee fall coupled with fall in steel prices internationally have caused heavy losses to traders importing steel. Imports will fall mirroring the current year's trend.”
Coking coal, an important raw material in steel making has seen a fall in prices. The FOB price of coking coal in the December-quarter was about $290 per tonne and steel makers are expecting the price to be at $240 in the January-quarter. However, a fall in the rupee has completely wiped out any cost savings that steel makers were expecting with this price fall.
