JSW Steel, one of the major flat steel manufacturers has announced price cut for its flat products by 2%. As per a company press release, the price for HR Coil is reduced by INR 500-750/MT. Market participants were expecting this price cut since the domestic demand has not seen any revival so far. The appreciating INR and falling prices of global flat products are believed to have initiated this move.
Falling Global Prices
Industry veterans consider two factors responsible for this revision in prices. Firstly, European prices have seen a steep correction in the past few days. HRC prices in Europe have corrected by USD 20-22/MT; currently trading around USD 573-575/MT. JSW and other manufacturers exported flat products to Europe & Middle East countries. This steep correction in European prices can affect its exports. A trend of HRC prices in Europe between Jan’14 to Mar’14 is as shown under:
Secondly, the appreciation of INR has made imports of flat products quite feasible. In addition to this, HR Coil prices from China have also depreciated by USD 5-10/MT making Chinese flat products more competitive to India. Currently, FoB price for HRC in China is at around USD 517-520/MT. Appreciating INR has made imports feasible, forcing manufacturers to cut domestic prices.
[su_quote cite=”Mr. Jayant Acharya, JSW Steel“]Considering the international steel prices and the appreciation of the Indian rupee, the company has adjusted domestic prices downward to align it with the landed cost of import.The domestic demand has seen an improvement in the last quarter and we are optimistic that steel consumption will rise in the current fiscal by around 5-6% in line with the projected GDP growth of the country.[/su_quote]
As per sources of SteelMint, JSW’s flat products have been in short supply in the domestic market since it had to fulfill a huge export order till the end of Mar’14. However, the current financial year can bring more surprises for the manufacturer as it has to deal with a difficult export market and the domestic flat steel market, which is still bleeding with low demand.
The price cut by JSW is a welcome move by the trader’s community. A trader based in Chennai said,
[su_quote cite=”Trader, Chennai“]This price cut was inevitable as the demand has been at all time low in the market. There was some shortage of JSW products in the market last month; however we expect good supply of its products this month. [/su_quote]
Other players like SAIL and Tata are yet to announce their prices for April.
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