Steel Minister Virbhadra Singh recently said that his Ministry will not allow any form of “cartelisation” in the industry, even as the SAIL Chairman CS Verma said that steel prices have bottomed out and could firm up in the second quarter.
“I will not allow anyone to form a cartel, whether it is public sector or private units. But if there is a justifiable reason for price increase, the Government will not interfere,” said the Minister after a meeting of the Steel Consumers’ Council.
Singh said that the Ministry wants some stability in prices.
“Consumers have raised the issue that prices should not fluctuate so much. We also want stability in prices. Prices should remain stable at least for a month. Luckily, we are in a position to moderate and influence the prices, being a large producer of steel ourselves,” he said.
Steel Secretary Atul Chaturvedi said: “Public sector steel companies take monthly decisions on the price of steel, but private manufacturers need not adhere to this practice.
However, we do exert moral pressure, but prices of deregulated commodities, including steel, keep fluctuating.”
Steel prices had risen by as much as Rs 4,600 a tonne from January to April. But after a surge in imports, prices fell sharply by about Rs 2,500 a tonne from end-May.
The Secretary pointed out that while earlier a few large players set the prices, such was not the case now.
After a slump in steel prices in the last two months, the SAIL Chairman said that prices had now bottomed out.
“During the first quarter of this financial year, steel prices were impacted mainly because of low-price imports.
Driven by surging imports, domestic steel prices declined by 12-15 per cent, even though raw material prices had shot up. Domestic prices of both flat and long steel products have now bottomed out and compare favourably with the landed prices of imports.
The probability of prices falling further, therefore, is remote,” said Verma.
After a surge in the first three months of the calendar year, steel prices fell Rs 2,000-2,500 a tonne towards the end of May and the first two weeks of June.
Verma said that with steel demand promising to grow globally in the second quarter, the downslide in prices is likely to be corrected.
“In the West, the vacation season would be over by mid-August and normal business is likely to resume. In addition, stocks in the service centres across Europe are now at very low levels and they may have no option but to re-stock.
The withdrawal of the 9 per cent export rebate on HR coils by the Chinese government and the slight floatation of the yuan are positive developments on the price front. Domestically, too, it is estimated that demand growth will be in double digits in the coming months,” he added.
SAIL is negotiating prices for coking coal, but Verma seemed confident that prices would have stabilised.
“The prices of coking coal for steel making which had shot up in Q1 appear to be stabilising globally due to a fall in off-take. Negotiations though, are still on for our requirement of different categories of imported coking coal,” he said.
The company meets its iron ore requirements from its captive mines and is not impacted by the volatility in the iron ore prices. Giving a positive outlook on the steel demand scenario in Q2, Verma said that mega infrastructure projects that are in full swing will offset the traditionally lean period for the industry.
“I will not allow anyone to form a cartel, whether it is public sector or private units. But if there is a justifiable reason for price increase, the Government will not interfere,” said the Minister after a meeting of the Steel Consumers’ Council.
Singh said that the Ministry wants some stability in prices.
“Consumers have raised the issue that prices should not fluctuate so much. We also want stability in prices. Prices should remain stable at least for a month. Luckily, we are in a position to moderate and influence the prices, being a large producer of steel ourselves,” he said.
Steel Secretary Atul Chaturvedi said: “Public sector steel companies take monthly decisions on the price of steel, but private manufacturers need not adhere to this practice.
However, we do exert moral pressure, but prices of deregulated commodities, including steel, keep fluctuating.”
Steel prices had risen by as much as Rs 4,600 a tonne from January to April. But after a surge in imports, prices fell sharply by about Rs 2,500 a tonne from end-May.
The Secretary pointed out that while earlier a few large players set the prices, such was not the case now.
After a slump in steel prices in the last two months, the SAIL Chairman said that prices had now bottomed out.
“During the first quarter of this financial year, steel prices were impacted mainly because of low-price imports.
Driven by surging imports, domestic steel prices declined by 12-15 per cent, even though raw material prices had shot up. Domestic prices of both flat and long steel products have now bottomed out and compare favourably with the landed prices of imports.
The probability of prices falling further, therefore, is remote,” said Verma.
After a surge in the first three months of the calendar year, steel prices fell Rs 2,000-2,500 a tonne towards the end of May and the first two weeks of June.
Verma said that with steel demand promising to grow globally in the second quarter, the downslide in prices is likely to be corrected.
“In the West, the vacation season would be over by mid-August and normal business is likely to resume. In addition, stocks in the service centres across Europe are now at very low levels and they may have no option but to re-stock.
The withdrawal of the 9 per cent export rebate on HR coils by the Chinese government and the slight floatation of the yuan are positive developments on the price front. Domestically, too, it is estimated that demand growth will be in double digits in the coming months,” he added.
SAIL is negotiating prices for coking coal, but Verma seemed confident that prices would have stabilised.
“The prices of coking coal for steel making which had shot up in Q1 appear to be stabilising globally due to a fall in off-take. Negotiations though, are still on for our requirement of different categories of imported coking coal,” he said.
The company meets its iron ore requirements from its captive mines and is not impacted by the volatility in the iron ore prices. Giving a positive outlook on the steel demand scenario in Q2, Verma said that mega infrastructure projects that are in full swing will offset the traditionally lean period for the industry.
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