The Hindu Business Line : Some steel cos cut prices by Rs 2,000

Mumbai, Sept. 10 Primary steel makers appear to be under pressure from softening global prices. On Wednesday, JSW Steel and Ispat Industries said they have cut prices by about Rs 2,000 a tonne with effect from September 1.

Marketmen said other steel makers would also follow suit. Officials at the country’s largest steel producer Tata Steel could not be reached for comment.

Analysts said lower prices in a scenario of rising input costs would squeeze margins for domestic steel companies.

Mr Seshagiri Rao, Director, Finance, JSW Steel, said the company had reduced prices by Rs 2,000 a tonne across all products due to declining global prices.

A Steel Authority of India official said: “We are not making any price adjustment at the moment and effectively the private producers are matching our prices”. (SAIL prices were below that of the private producers).

The official said prices of a select category of flat steel products have been reduced by the private producers as global steel prices have been coming down during the last two months, making imports cheaper than ruling domestic prices in some cases.

Prices for long-term contracts have been cut to the extent of Rs 2,000 to Rs 3,000 a tonne. Following the price cut by the private producers in the long-term contracts, spot prices were also witnessing a downward moment in the last few days, said the SAIL official.

The Steel Secretary, Mr P.K. Rastogi, had also said domestic prices could decline further in September, tracking international markets as domestic producers were not able to sell because their prices were high and people preferred to import.

Indiabulls Securities Research said with inflation at record levels infrastructure development across the globe will be adversely effected. “We believe developers will delay the procurement of steel especially in the view of the recent downtrend in prices. Further, supply is expected to improve as China, which had curtailed production because of the Olympic Games, resumes production. Therefore, we expect steel prices to witness a sharp decline before settling at $700-750 a tonne by the end of the financial year 2009.”