The Hindu Business Line : Falling prices hit Salem Steel exports

Steel experts had forecast that stainless steel prices in the global market would continue to remain dull. A combination of several factors including high inventories and summer holidays in northern hemisphere would keep the prices down.

Kolkata , Aug. 15

WEAKENING of global stainless steel prices has affected the exports of Salem Steel Plant, the specialty steel producer of Steel Authority of India Ltd (SAIL).

Unlike the four other integrated steel plants of SAIL, Salem Steel Plant has been a major exporter of specialty and stainless steel. In fact, this unit's turnaround was based on the good returns from foreign trade.

For 2005-06, the management of Salem Steel had drawn up elaborate plans to further boost its exports. However, the poor global stainless steel prices have upset the plans.

According to Mr M. Roy, Executive Director of Salem Steel Plant, exports of this unit had virtually stopped because stainless steel prices had dropped to abysmally low levels.

"Prices of stainless steel had dropped sharply in the last few months. It had been noticed in the Chinese market too. This factor had affected our export programme," Mr Roy told Business Line.

He agreed that the fall in the stainless steel prices is actually a reflection in the overall weakening of the global steel prices. He, however, added that mild steel prices had improved recently but a similar impact was yet to be seen with regard to stainless steel prices.

During 2004-05, Salem Steel Plant exported 67,000 tonnes of stainless steel against the domestic sales of 27,000 tonnes. According to Mr Roy, Salem Steel's products were exported to 19 countries, which included South Korea, Taiwan, Vietnam, Malaysia, US, Egypt, Turkey, Bangladesh and others.

Steel experts had forecast that stainless steel prices in the global market would continue to remain dull. According to them, a combination of several factors including high inventories and summer holidays in northern hemisphere would keep the prices down.

"Many producers have announced output cuts in an effort to bring the market back into balance. This has been made necessary by the excessive rate of production since mid 2004. The resulting over-supply has caused fall in stainless prices," experts said.

In Europe, ThyssenKrupp Stainless, Ugine & ALZ and Outokumpu have reduced production. Similarly, in Asia stainless mills in Taiwan, Korea and Japan are reducing their operating rates, citing the need to bring down stock levels. Even Chinese cold rolled stainless producers are reining back their production.

Mr Roy said that Salem Steel had created a special team of officers to tackle this problem. "We have restructured our marketing set up. Despite the fall in prices we are focusing both on the domestic and foreign markets," he said.

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