Steelmakers see muted prices over short term

Steel Authority Of India Ltd. | Steel & Iron Products | Metals & Mining | BSE: 500113 | NSE: SAIL

20 Nov 2009 Evaluate

With Indian producers slashing prices by Rs 1,000-1,500 a tonne in recent weeks and public sector Steel Authority of India dropping prices of flat steel further on Monday, prices are unlikely to move northwards in the current quarter.

Steel producers do not expect any excitement on the pricing front, at least in the short term. Domestic steel prices could stabilise at current levels in the third quarter. However, much would depend on factors including the global and domestic production.

Big players like SAIL and Tata Steel does not see upbeat on prices. H M Nerukar, managing director, Tata Steel said that the demand for steel was good, but it would not get great prices at present. It is an open world and there is overcapacity. If prices go up by $50, there will be some players to supply and bring down prices. S K Roongta, chairman, SAIL, said that the prices were being reduced because of the softening global trend. Further it is unlikely that steel prices would go up immediately. Industry sources said that although domestic demand was not a problem, there are reasons for apprehension as China has continued to offload its excess capacity in the international market.

Domestic prices are expected to remain under pressure in the short term. Domestic producers have cut flat product prices by $21-31 per tonne for deliveries beginning November 2009 in response to a fall in global prices and surging imports. We expect domestic prices to stabilise at current levels in this quarter.

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