SAIL: No major steel price correction in two months

SAIL: No major steel price correction in two months
Business Standard, March 6, 2009, Section II, Page 10

Press Trust Of India / New Delhi

State-owned steel major Steel Authority of India (SAIL) does not see any major correction in steel prices over the next two months even as the demand has started firming up from sectors such as automobile and construction, a top official of the company said.

"In one or two months, we don't see any major correction in steel prices," SAIL Chairman S K Roongta said today.

Admitting that sales volumes of steel producers have increased during last two months, he said it only indicated there could be some price stability, not major corrections.

Roongta said there has been a partial revival in demand for steel from sectors such as automobile and construction, resulting in better sales volumes.

After recording a negative growth in January, SAIL reported a nine per cent surge in sales volume at 11.7 lakh tonnes in February.

Asked if the company would be able to achieve the same level of growth in the first quarter of the next financial year, Roongta said that it was unlikely.

However, the company hopes to make best efforts to see it did not slip in the negative terrain in the first quarter of FY10, Roongta said.

As automobile industry reported a robust growth in the last two months, the SAIL chief said it should have a reflection on the demand for steel.

"We are seeing a gradual improvement in demand from the auto segment. It will be much improved from the third quarter, which was poor," he said.

On whether SAIL has negotiated lower coking coal prices under new contracts, Roongta said the details of commercial negotiations couldn't be divulged.

Along with major producers such as JSW and Tata Steel, SAIL is negotiating lower coking coal prices from international suppliers such as BHP Billiton.

From $96 per tonne in 2007-08, coking coal prices went up to $300 a tonne this fiscal, increasing the input costs of steel makers.

"... There was a substantial raise (in coking coal prices) in 2008-09 as compared to 2007-08, which has to come down in view of the market situation for steel at this moment," Roongta said.