SAIL says steel prices set to fall

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

31 May 2010

Steel Authority of India (SAIL), the country’s largest steel producer, has hinted at a reduction in prices in line with the downward trend overseas. “In the last three to four weeks, global steel prices have weakened to the extent of $80 -100 (Rs 3,705-4,631). It is a natural phenomenon that if the prices in the international markets come down, steel prices will be impacted in India also,” S K Roongta, chairman, SAIL, said.
He did not disclose the extent of the reduction in the prices.
Another factor that is likely to impact the steel prices in the coming weeks is the reduced input cost of steel. In the last fortnight, spot prices of iron ore fines have dropped by about $40 a tonne and coking coal by $20 a tonne.
At present, ore prices are hovering at $140 a tonne and coking coal at $240 a tonne.
SAIL imports most of its coking coal needs and, from the first quarter of 2010-11, import contracts have started to be settled on a quarterly basis as compared with yearly contracts till last year.
The coking coal contracts are up for review for the July to September quarter. If the coking coal prices remain weak, there could be a further decline in the prices of long and short steel products produced by SAIL, which will have impact on the pricing of other steel companies in India.
Meanwhile, SAIL reported a 40% increase in its net profit for the fourth quarter of 2009-10 at Rs 2,085 crore as compared with Rs 1,485 crore for the corresponding period last year.
The company’s improved profitability in the fourth quarter was mainly due to market-oriented product mix.
The company increased production of value added products by 37%. The company also achieved better sales realisation in the fourth quarter of FY10.
SAIL is planning a capital expenditure of Rs 12,500 crore in the current fiscal, for which it plans to borrow Rs 6,000. The company had a debt of Rs 16,511 crore on its books as on March 31, 2010.

Source: DNA India