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Tuesday, April 13, 2010

Steel prices to hover at current levels in FY11

Domestic steel prices are expected to remain at the current level during 2010-11, a top steel ministry official said, adding that any upward movement in the rates of the commodity would erode the rising demand.

"I think, steel prices would remain at current levels. If it goes up, it will dent steel demand," Steel Secretary Atul Chaturvedi said. The current trend in steel prices is not a cause of worry, he added.

At present, steel prices are moving upwards on the back of a rise in the cost of vital raw materials like iron ore and coking coal as well as high demand by the consuming sectors like automobile and infrastructure.

"Steel demand is expected to grow at 9-10 per cent this financial year (over last the fiscal)," Chaturvedi said. India's steel demand in 2009-10 rose 7.6 per cent to 56.32 million tonnes. "Commodities like steel have cyclical demand movement. At present it is moving in the upward territory," he added.

Tata Steel Managing Director H M Nerurkar had yesterday said steel demand in India is expected to be 10-12 per cent during the year.

Cashing on the rising demand and high cost of raw materials like iron ore and coking coal, domestic steel producers like Tata Steel and SAIL had earlier in the month raised prices of their products by up to Rs 3,000 a tonne.

Mining firms like Rio Tinto, BHP Billiton and Vale are entering into new iron ore and coking coal supply contracts with global steel makers for April-June quarter. For iron ore, the contracts are being entered at about $110-120 a tonne, which is 80-100 per cent more than the levels in 2009-10.

Coking coal supply contracts are reported to have been signed between Japanese steel mills and Australian miners--Rio and BHP--at about $200 a tonne for April-June 2010, against last fiscal's $105-130.

Nerurkar had also said the rise in input cost will lead to an increase in steel prices, while the global over-supply scenario would factor in domestic pricing.

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