Steel firms to hold prices for now

Steel prices are expected to remain stable in the spot market next month as demand for domestically produced steel products has revived marginally, say primary steel makers. Spot prices of steel products, which have been falling since May 2008, have stabilised or moved up in the international market in the last few weeks. This should allow firms such as JSW, Ispat and Essar to keep prices unchanged. Indian steel prices stabilised at Rs 30,000-32,000/tonne early this month after falling more than 35% from Rs 48,000-50,000/tonne in April 2008. International steel prices have more than halved to $600-700/tonne level from $1,400/tonne early last year. “The government’s move to impose 5% import duty, in addition to upward movement in prices of some Chinese products, has made imports costlier. This, in turn, has pushed up the demand for domestically produced products. We don’t intend to revise prices either upwards or downwards next month,” JSW Steel director (finance) Seshagiri Rao said. Rise in demand for steel in China, the world’s largest steel producer, is visible from the fact that India’s iron ore exports to China picked up in the last few months. Iron ore is a key input in making steel. The country’s iron ore exports surged 38% to 13.6 million tonnes in December 2008 as compared to 9.8 million tonne in the previous year. About 50-60% of India’s iron ore exports are to China. “The levy of 5% import duty on steel products has provided relief to the domestic players and helped in doing away with unnecessary inventories. The duty should be further increased to at least 15% as the steel market is yet to recover from the global meltdown. As of now, we have no plans to alter prices,” said a senior executive of Essar Steel who didn’t wish to be named. Steel firms, which had cut production last October citing low demand, have also either resumed full scale operations or increased their production levels to match the domestic demand.