The Hindu Business Line : Steel majors cut prices on rising inventories

CLOSE on the heels of Steel Authority of India Ltd (SAIL) slashing product prices, steel majors Tata Steel, Essar Steel and Ispat Industries on Friday announced a cut in their prices by around seven to eight per cent on account of rising inventories.

According to company sources, Tata Steel slashed prices by as much as Rs 3,000 for its branded flat products. Essar Steel has revised prices for its products in the domestic markets by approximately five to eight per cent with immediate effect. Ispat Industries has also announced lowering of its steel prices by around seven per cent, largely due to rising inventories, company sources said.

SAIL had, on Thursday, announced a cut in prices by Rs 500 to Rs 2,000 per tonne. The company had termed the price cut a "temporary correction" owing to market fluctuations, triggered partially by China's low intake of steel. The cut, to be effective from today, was necessitated by the present demand and supply situation, besides lowering of global steel prices, a SAIL spokesman had said.

However, the public sector steel major is hopeful that within a month or two, global steel prices would stabilise and the market would allow prices to rise.

The hike in steel prices globally has once again put the spotlight on China's reduced intake of Indian steel as a measure to cool down its overheated economy. In India, however, demand for steel is on the rise due to a construction boom, increased spending on infrastructure projects and burgeoning automobile sector that is expected to fuel demand for domestic steel in the coming years.

The domestic steel production, which was an estimated 35 mt in 2003-04, is estimated to grow to 38 mt by 2006-07 and further to 52 mt by 2011-12.

In the light of the possible rise in domestic demand, the major steel utilities have announced plans for capacity expansion.

Tata Steel has set a target to produce 15 mt of steel per annum by 2010. Public sector behemoth SAIL was aiming to expand its overall production capacity to 20 mt per annum by 2011 from the present 11 mtpa . Rashtriya Ispat Nigam Ltd has targeted a capacity of 10 mtpa by 2020 as against 3 mtpa at present.

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