In what could mark the end of a bull run, flat steel producers are likely to cut prices from June.
The euro's weakness, correction in international prices and an unusual inflow of steel into the domestic market have led to a fall in prices.
As things stand, the list price of flat steel - used in automobiles and white goods - could be reduced from June. Else, companies may offer significant discounts.
Producers indicated inventory levels at Shanghai were high, at about 1.7 million tonnes, which could have added to the sentiment. Chinese domestic HRC producers recently cut prices sharply (by about $29 a tonne).
Steel Authority of India Chairman S K Roongta said there had been a correction of $50-70 a tonne in the past two to three weeks. Vinod Garg, director-marketing, Ispat Industries, said capacity utilisation had picked up in the global markets.
According to World Steel Association figures, crude steel production for the 66 countries that report to it was 120 million tonnes in March, 30.6 per cent higher than in March 2009.
Domestic producers are also concerned over an import surge. Flat steel imports during April were up 57 per cent year-on-year and 27 per cent month-on-month, led by a surge in imports of HRC, HR Sheets and cold rolled (CR) coils and sheets.
China continued to dominate the import scene, accounting for 40 per cent flat steel imports into India. In case of HRC and sheet imports, the percentage was as high as 63.
Also, the cost pressure has eased to an extent, with spot iron ore prices dipping by about 15 per cent since April. Coking coal prices eased marginally today. An HR producer said even if rack rates were not brought down, discounts would be given, as traders were playing spoilsport.
"The seasonality also has to be factored in. India is heading for monsoons, which is off-season for the industry. As of now, there is no change in prices, but we still have about 12 days to June," said Ankit Miglani, director-commercial, Uttam Galva Steels, a CR and galvanized steel producer.
However, producers say they are not worried. "If it stays around $700 a tonne, it's still a good price," said Singal. Steel prices have increased by 28 per cent from December to March, with HRC at Rs 34,000 a tonne.
