Steelmakers may lower prices to spur demand

Suresh P. Iyengar Updated - November 14, 2017 at 05:00 AM.

Rupee depreciation makes imports costly

BL11_P5_STEEL

Steel companies are expected to drop prices by Rs 3,000-5,000 a tonne in December, after keeping it unchanged in November.

Despite demand slowing down, major steel makers such as SAIL, Tata Steel, Essar Steel and JSW Steel have restrained from cutting prices as imports have turned costlier with the rupee depreciating against the dollar.

HR coils

The landed cost of a large shipment of hot rolled coil, booked in June, expected to arrive in India shortly, now works out to Rs 35,000 a tonne, a trader said.

The ex-factory price of HR coils is currently at Rs 38,500 a tonne and totals up to Rs 44,000 with freight, excise duty and other levies.

Mr Arun Agarwal, a steel trader from Bhiwani, Haryana, said, steel prices across the globe have come down sharply following the economic crisis, except India.

“Postponement of purchases by many buyers in anticipation of a dip in prices is one of the reasons for the present slowdown in demand,” he felt.

Low consumption

Growth in domestic steel consumption in the first half of this fiscal slowed down to about 2.5 per cent from 14.5 per cent registered in the corresponding period last year.

Off-take from major infrastructure and real estate projects has tapered due to the hike in lending rates.

Besides, demand from automobile and white good sectors has also been hit by poor consumer spending.

“Our profit margins are already under stress as we were unable to pass on the incremental cost on the coal, iron ore and fuel to end-users due to reduced demand which is not expected to revive soon, given the current financial constrains. A price cut looks likely next month,” said a steel company official.

The recent meltdown in global steel prices has not helped the Indian consumers as the 15 per cent depreciation of rupee against the dollar has deterred imports.

During the last 20 days, steel prices have fallen by $50-$100 a tonne in Europe and the US.

The sovereign debt crisis in Italy may further worsen the situation, said an analyst.

Published on November 10, 2011 15:00