New Delhi: Domestic steel producers may soon cut prices marginally because of a threat of dumping by countries like China, where inventories have piled up after the Olympics.
Taking the lead, state-run Steel Authority of India Ltd. (SAIL) has announced cutting rates by up to Rs1,600 a tonne on select categories of products this month while producers like Essar, JSW and Ispat are mulling similar options.
Prices of major steel products like hot-rolled coil have come down to Rs32,000 a tonne from its peak of about Rs55,000 per tonne, earlier this year.
The companies see steel prices stabilising in the near future, but they do not rule out a correction in rates following China’s move to scrap five per export duty, which could lead to the Indian market getting flooded with cheaper items.
“We are talking to our customers. Steel prices are stabilising at the moment, but we will continue to follow the international trends,” JSW Group CFO Seshagiri Rao said, adding that the company has not yet decided on price cut.
Rao said demand for long steel products, mainly used in construction, is picking up but it would take some time for the sales of flat products to stabilise as consuming industries like auto continue to reel under waning demand.
An Ispat industry official said that steel prices are seen stabilising in the near term whereas an Essar Steel spokesperson said the company’s prices will be in line with the market. Analysts foresee steel prices going down marginally in the near future as domestic producers would have to maintain import-parity rates.
“To protect their businesses against cheaper imports from China and maintain a price line in sync with the global market, domestic steel producers may cut rates,” said Ernst & Young Partner Navin Vohra.