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Ambarish Mukherjee

New Delhi , May 23

AFTER a dream run for more than two years, steel stocks have started cooling down, particularly in view of the fact that imports are going up following softening of international prices.

On Monday, despite a buoyant market with the Sensex inching up by another 40.33 points, stock prices of steel companies went down across the board.

According to industry sources, the fall was expected because hot-rolled steel prices in the domestic spot market have gone down by around Rs 500 a tonne during the past two weeks which would affect the companies' earnings for the first quarter.

According to a senior official in the Steel Authority of India Ltd (SAIL), "though volumes are very strong, prices are weakening because of international trends, which are paving the way for cheaper imports."

Global steel prices started softening since the middle of March this year, while domestic prices prevailed strong till the end of March.

Around the beginning of April, Indian buyers had booked substantial quantities for imports, which are expected to start arriving from the beginning of June.

Additionally, according to steel industry sources, the traders who had built up large inventories during February and first half of March hoping that prices will go stronger, have de-stocked during the past few weeks following the decline in global prices, which has put further pressure on the prices.

According to a senior broker, the fall in steel prices would be reflected in the first quarter results of these companies, which is why the market has started discounting them already.

As a result, though most of the sectors were buoyant on Monday, SAIL went down by 3.28 per cent, Tata Steel suffered a loss of 1.28 per cent.

Other producers such as Jindal Vijaynagar fell 2.14 per cent, Ispat 3.48 per cent and Bhushan Steel declined 4.67 per cent.

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