SAIL Rules Out Price Reduction

The state-owned steel major Steel Authority of India (SAIL) today ruled out any reduction in domestic steel prices in the near-term, citing the firming global price trend and the rising input costs.

"As of now, the international prices are firm; scrap and coke prices are ruling high. So, I don't see any possibility of lowering the prices in the near-term...Iron ore prices have gone up...Putting some pressure on cost," SAIL Chairman S K Roongta told reporters here today.

Domestic steel firms, including SAIL and Tata Steel, had increased prices of their different products by up to Rs 4,500 a tonne in the past two months, raising inflationary concerns and prompting the government to term the price hike as speculative.

However, Steel Secretary Atul Chaturvedi had hoped otherwise and was anticipating some correction in the steel prices this month.

Terming the "Rs 8,000-10,000 a tonne" hike in the price of long steel products--used mainly by infrastructure and construction firms--in the past few months as "not warranted by market conditions," he said it got corrected by 3,000-4,000 a tonne recently.

"As far as SAIL is concerned we have not increased our long steel prices to the extent of the increase in the market price. So, we didn't have to rollback," Roongta said.

But, he maintained that SAIL will cut prices "as and when market conditions demand it".

On any likely increase in its input cost pressure next fiscal, SAIL chief Roongta said: "There is a possibility that long-term prices (of coking coal) may go up in the long-term."

"We don't import coke, but we import large quantities of coal. As of now, we have long-term contracts (till) March, but the new contracts have to be negotiated," he added.

Roongta further said the rise in input cost will hit steel producers without captive mining reserves. "Basically, iron ore prices are moving up. Since we have captive iron ore mines it will not hit us, but it will impact those producers who do not have backward integration towards mining."

"Also ferro-alloys like ferro-manganese, ferro-silicon, copper, zinc prices have moved up," he added.

Iron ore, coking coal along with the ferro-alloys are key input in making steel. Domestic steel prices are hovering in the range of Rs 26,000-35,000 tonne.

Source: Business Standard