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Friday, Aug 30, 2002

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Steel prices may rise on US trade panel ruling

Ambarish Mukherjee

NEW DELHI, Aug. 29

STEEL prices in the domestic market, which have increased by around 22 per cent during the past five months, are likely to go up further over the next few months following the International Trade Commission (ITC) giving a clean chit to India and relieving it from anti-dumping charges, according to highly-placed sources in steel manufacturing companies.

According to preliminary estimates made by domestic steel manufacturers, there could be an increase of another four to five per cent in prices over the coming months following the ITC ruling. "And this will be export-led price hike,'' steel company officials pointed out.

"This time we might witness an across the board price hike with the lead coming from the cold rolled (CR) products where the existing supply-demand mismatch will be evened out with higher exports,'' a top official in a steel manufacturing company said.

India has a CR steel producing capacity of around 50 lakh tonnes while the domestic demand is in the range of 32 to 33 lakh tonnes.

Steel manufacturers have sprung into action since Wednesday to capitalise on the export opportunity thrown open by the ITC ruling.

According to plans, orders will be booked within a month and actual shipments will start from around mid-October.

But there will be a slowdown in shipments during November and December as some ports in both US and Canada will close down with the onset of winter.

From January onwards again shipments were likely to pick up, unless the US-based steel producers again come out with some plans to stall imports with the help of their Government, steel company officials noted.

According to them, CR steel producers will be able to get rid of their excess production by exporting to the US and Canada which are very large buyers following which with no excess supply in the market they will effect price hikes.

Right now while average price in the domestic market is around $450 (Rs 22,000-23,000), the ruling price in the US is in the range of $460 to $480, already commanding a premium.

With higher offtake of CR products, demand for hot rolled steel would also go up by the same amount. Already demand was picking up and so the prices were bound to go up, officials said.

Industry sources also pointed out that during the current year, despite the 153 per cent duty that was in place before the ITC ruling earlier this week, export of Indian CR steel items into the US and Canadian market had gone up substantially in percentage terms, though volume increase had been marginal.

During calendar 2001, total exports of CR products from India to the US and Canada were 1,518 tonnes while during January-June 2002, India exported 2,189 tonnes of CR steel to the US and Canada.

Exports will get a further boost following the hike in exporters' incentive through the Duty Exemption Passbook Scheme (DEPB), which had recently been increased to 17 per cent from the earlier 15 per cent.

This means, at present prices an exporter will be entitled to an incentive of approximately $68 top $70 for every tonne of steel exported.

"This is a very attractive opportunity for all of us. One might call it a coincidence but these two developments can go a long way in sorting out domestic steel industry's problems,'' officials said.

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