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Steel imports down on lower domestic prices

Steel firms attribute the increase in prices to the steep hike in raw material costs, reports Indulal PM.
Hindustan Times | By Indulal PM, Mumbai
UPDATED ON MAR 13, 2008 11:19 PM IST

Import of of hot-rolled coils (HRC) have dried up with the domestic steel prices being lower than international prices. Steel imports have almost halved between November and January, analysts tracking the setcor said.

In February, the government had forced domestic stell companies to brring down steel prices after they raised prices thrice over the last nine months.

HRC imports in November was around 322,200 tonne, coming down to 187,100 tonne in January, while exports have come down from 122,000 tonne to 88,000 tonne.

A Goldman Sachs analyst said this is "mainly due to the fact that the international prices are around 15-18 per cent higher than Indian prices".

Domestic HRC prices have increased by 15 per cent over the last one year. Major suppliers, including SAIL, JSW Steel, Tata Steel and Essar Steel have also increased their domestic supply to a large extent.

"Another factor could be the increase in domestic steel consumption, which is almost double the supply," said an analyst with Macquaire Research. Steel consumption in the country is growing at the rate of 12.6 per cent, while supply growth stood at 6.6 per cent during April-December, 2007 period.

However, analysts forecast another round of price increase by the end of this month or early next month. Steel firms attribute the increase in prices to the steep hike in raw material costs.

"The raw material prices have almost doubled during the last one year. We are watching the situation carefully," said Sheshagiri Rao, CFO, JSW STeel.

Iron ore prices have increased by 143 per cent in the last year, scrap prices by 108 per cent, coking coal prices by 212 per cent and thermal coal by 114 per cent. Merril Lynch analysts had on March 10 revised contract forecasts for thermal and coking coal, predicting another 200 per cent jump in prices.

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