Business Daily from THE HINDU group of publications
Tuesday, Aug 12, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Tuesday, Aug 12, 2008 ePaper | Mobile/PDA Version | Audio |
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Markets
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Stock Markets Industry & Economy - Steel BL Research Bureau Steel producers who have been grappling with rising input costs and increasing costs of borrowing may have to forego price increases on their products for some more time. Last week, steel majors including RINL (Rashtriya Ispat Nigam Ltd), Tata Steel and JSW Steel have agreed to hold their price line for some more time on declining global steel prices and pressure from the Government to do their bit to curtail inflation. The domestic steel producers’ self-imposed moratorium in May to hold prices for three months came to an end last week. Companies are now confronted with the double whammy of soaring input costs and rising interest rates, with no flexibility to pass this to users through price increases. Margins of some companies are already showing signs of pressure and these may be worst impacted by the price freeze. Others, who have already tied-up funding, may feel the impact with a lag. Prolonged pressure on margins may also have a bearing on the ongoing expansion plans of some companies such as JSW Steel, by impacting cash flows. The meltdown in global steel prices in recent weeks, if it persists, also poses a threat to realisations. Companies are resorting to a slew of measures to enhance the internal productivity and are investing in R&D to reduce material and fuel consumption as a means of cost control. On its part, the Government has promised a dialogue between the domestic iron ore miners and steel manufacturers to facilitate the supply of iron ore at affordable rates, to enable the latter to hold prices. More Stories on : Stock Markets | Steel
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