India: Domestic steel prices may soften in September amid cooling overseas markets

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Aug 2008

Domestic steel prices may soften in September, shadowing global markets. Analysts at domestic brokerages said that spot hot-rolled coil prices (HRC) in overseas markets have currently come down to USD950 (Rs 40, 850) per ton, as against USD1,150 (Rs 48, 875) levels in mid-July, due to sluggish construction demand in China and the US. Domestic steel prices are typically revised in the first week of the month and when ET spoke to senior officials at JSW Steel, Essar Steel and Tata Steel regarding the future direction of prices, they highlighted that they are still reviewing the current domestic demand-supply situation, before making a final decision. However, analysts do point out that domestic steel companies’ ability to make deep price cuts would be limited, as they are grappling with higher cost of inputs, like imported met coke, which are at record levels of USD400 per ton levels.
Meanwhile, domestic spot HRC prices are currently pegged at around Rs 40, 000 a ton and have been hovering around these levels for almost three-and-a-half months, following assurances given to the government by steel companies that product prices will be stabilised. However, in case of long-term contracts, players like JSW Steel and Ispat Industries had raised their prices as per the terms of their contracts with customers, in a bid to pass on rising costs.
Earlier, the rising cost of contract prices of steel for end-user industries like the consumer and auto industry, had resulted in them raising prices in a bid to protect their margins. For instance, consumer durables player Videocon had hiked prices by 5-8% in early August, across its models of refrigerators, washing machines and TVs, in a bid to pass on higher costs. Also, the two-wheeler maker Hero Honda had recently announced a fresh hike in prices ranging from Rs 600-1,500 across its models, in addition to a Rs 850 price hike at the beginning of August 2008 for its 100 cc bikes.

Source: Economic Times