The Hindu Business Line : Steel prices likely to firm up by September: RINL chief

Mr Y. Siva Sagar Rao, Chairman and Managing Director, Visakhapatnam Steel Plant, and Mr H.S. Chatwal, Director, Commercial, addressing a news conference in Visakhapatnam on Monday.

Visakhapatnam , July 18

STEEL prices have already bottomed out and there is no possibility of a further reduction in the near future, according to Mr Y. Siva Sagar Rao, Chairman and Managing Director of the Rashtriya Ispat Nigam Ltd (RINL). He added that by September, steel prices may firm up.

Analysing the factors that led to the fall in prices, at a press meet in the plant on Monday, he said that the prices of the finished product had fallen but the input prices remained pretty high.

"Therefore, I feel the speculation that there may be a further fall in prices is ill-founded. In fact, prices may firm up by September. Anyway, we are not contemplating any price correction till the end of August. Then, depending on the market, we will fix the prices."

Mr Rao added that RINL had already reduced prices by Rs 2,000 a tonne, like other companies, and the average price a tonne is currently Rs 26,000.

On the proposed expansion of the plant, Mr Rao said that the PIB had cleared the proposal and the Cabinet approval was awaited. "We are expecting it by August 15. We will go to work immediately once it is cleared. The workforce is highly motivated."

On the performance of the plant in the first quarter, he said that it was quite satisfactory despite the fall in prices.

"There has been 15 per cent growth in hot metal production and four per cent growth in saleable steel. The profit before tax at Rs 489 crore has registered a growth of 41 per cent. But the tax burden had increased this year; RINL had to pay Rs 168 crore during the quarter."

He added that the accumulated losses, estimated at Rs 600 crore, might be wiped out by October.

According to Mr Rao, steel imports had risen considerably in the first quarter, but the quality of the steel being imported was inferior, though cheaper by Rs 2,000-3,000 a tonne.

During the first quarter last year, 80,000 tonnes of steel were imported against 1,40,000 tonnes this year.

To a question, he said that RINL was not perturbed over the fall in prices or the high inventory costs. The company was holding on to five lakh tonnes of steel and the inventory cost was hardly Rs 100 per tonne, he added.

An appropriate marketing strategy has been devised, with emphasis on the user rather than the trader, to sell the steel products, he said.

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