Corus left shoulder or the foothills?

Indian steel makers keep prices unchanged in Jan
Sat Dec 31, 2005 7:02 PM IST

MUMBAI (Reuters) - Indian steel makers have decided against a price cut in January as they expect global prices to firm up and domestic demand to remain steady, industry officials said on Saturday.

Indian steel companies have slashed prices by more than a quarter since April 2005 as global prices eased on a pile-up in global steel inventory and fall in Chinese demand.

"We have decided to roll over prices to January. I believe, other producers too are not changing prices," Seshagiri Rao M.V.S., finance director at JSW Steel Ltd., said.

"There are indications that steel contracts for March are being offered at $15-20 a tonne premium to those of January and February."

Prices of hot-rolled coils, which go into steel used in construction, shipping, railroads and automobiles, are currently around $400-410 per tonne in the international market, while it is sold at 20,500 rupees ($455) per tonne in India.

POSCO Co. Ltd., the world's fifth-largest steel maker by output, early this month said it would cut prices of 13 domestic steel products by up to 17 percent in 2006 amid concerns of a supply glut from China.

Sliding steel prices caused by excess supplies from China are compounding the woes for the global steel industry, which is already coping with the surging cost of raw materials such as iron ore.

In November, Baoshan Iron and Steel Co. Ltd., China's biggest and the world's No.6 steel maker, announced it would cut product prices by an average of more than 10 percent in the first quarter of 2006, setting the stage for price cuts by global competitors such as Nippon Steel Corp.

Steel prices soared last year as China's economic boom sucked in raw materials, with prices peaking in the second half as clients built up stocks amid fears of a shortage.

"Prices can fall further only if there is a drastic cut in prices of raw materials such as coal and iron ore," Rao said.

India's leading steel producer include Steel Authority of India Ltd. (SAIL), Tata Steel Ltd., Ispat Industries Ltd., JSW Steel Ltd. and Essar Steel Ltd.

($1 = 45.2 Indian rupees)