Online
Essar Steel plans price review in August
Published on Fri, Jul 04, 2008 at 10:58 , Updated at Mon, Jul 07, 2008 at 09:39
Source : CNBC-TV18
| ads by google |
Excerpts from CNBC-TV18's exclusive interview with J Mehra: Q: There are reports, saying that steel producers have agreed to hold prices beyond July. Is that a true assessment? A: What we have said is that it is not necessary for us to look at any price increase going forward. It will be taken note of as and when we enter into that period. Right now we haven’t as yet thought over for these prices. Q: All this is very ambiguous, earlier there were talks that prices will need to go up in August and we all know that raw material prices are such that steel companies would need to raise prices. Are you giving a definitive undertaking that you will raise prices, or not? A: We are not saying that, what we are saying in our commitment that we will not review the prices till July stands. Going forward we will take a view in August. The prices may not necessarily go up, the prices may remain or may have to be pushed up depending on how the prices on iron ore, the gas, the coke and the coal take that kind of pricing and how it moves up or moves down. But it is not necessary that the prices will (go up); we have decided to ensure that the prices go up in August. Q: Is there any talk of price cuts right now on specific products this month? A: No. Q: There has been a re-look or a rethink about what happens with exports as well for some of the steel companies that they might cap it, lower it. What about that part of the puzzle? A: As it is, if you have seen in the Q1, the exports have gone down by over 30% and that bothered our commitment that we will put a restrain on exports, which have been achieved. The domestic market availability has increased substantially compared to the corresponding quarter last year. The problem basically should be understood is as follows. That the international prices are very high and therefore the gap between the domestic and international prices as such that those who were importing earlier are not importing. They are now putting a pressure on the domestic supplies. The domestic supply has a limitation. Therefore there is the issue of hue and cry on this and the government policy to pressurize, to contain the prices is creating more problems. If the domestic prices are permitted to move up closer to the levels of the international prices, the imports will begin and that is what is required. Q: But you yourself as part of the industry are saying that you are not looking at increasing prices, so where do you think that would leave the situation over the next few months? A: We are as concerned as the government is about inflation. The government may not be able to control inflation, because the price increase is only for limited percentage of goods that is being traded and not the overall transaction of the country. So there has been quite a restraint on the domestic prices. But going forward this artificial control will not help contain the prices. There is a supply demand gap and the concentration should be to improve the supply. Q: What’s your sense of what’s going on with global steel prices. Global steel stocks have crashed in the last couple of days on concerns that prices will crack soon, as buyers are putting up a lot of resistance. What’s your take on it? A: The market is speculative, so I will not comment on that but as far as the demand and the pricing internationally are concerned there has been no impact. Q: You do not see any slowdown in global steel prices then? A: No, not at all. We have an outfit in the US and the prices are quite firm. Q: There has also been a fantastical increase in the prices of raw materials with specific reference to iron ore. Do you see prices remaining this high? A: The coke prices have moved upto USD 780/tonne to USD 790/tonne. Coal prices have gone to USD 350/tonne, it was trading at USD 98/tonne last year. The ferro alloy prices have shot up by 45-50% and the iron ore prices have moved up by 75-80%. There is a limit to absorb all that cost-push. They can be absorbed upto a point. So we have tried our level best to absorb this cost as much as we could, but it’s very difficult to absorb the entire increase.
Q: Over the next few quarters because of these kind of raw material cost increases - are you expecting to see a sizeable shrinkage in margins for most steel companies? A: Yes, of course. It is already if you see the first quarter compared to the previous quarters there is shrinkage on the bottomline. |
Messages on Business Talk
Other comments
Citigroup Files Suit Against Wells Fargo and Wachovia !!
the jilted banking concern made it official today. Citi filed suit against WB, WFC, and the directors of the 2 comp...
in Business Talk - Lalitdeshpandey at 07-Oct-08 02:20
Industry body can resolve RIL-RNRL tussle: Bombay HC
RIL should honour the committment made to RNRL at the time of division of businesses during their family settlement...
in Business Talk - A K Mehta at 06-Oct-08 01:17
Rate this article
News
No News on Essar Steel
Notices
26-12 Members of the Exchange are hereby ...
19-12 Essar Steel Limited has informed th...
Expert Advice
No Expert Advice on Essar Steel
Management Interviews
29-07 We are targeting 2.4mt output: Essa...
28-01 Essar Steel expects volume growth o...
Brokerage Reports
No Brokerage Reports on Essar Steel
Technical Calls
No Technical Calls on Essar Steel
Chat
Ramesh Damani
Member BSE ,
(07 Oct- 16:30hrs)
What's good investment now?
Poll
Newsletter
Keep in touch with News day & night. Subscribe to:
Mobile Services
Get news on the move SMS to 52622
- SMS M for Market News
- SMS B for Latest Business News
- SMS S (stock name) for latest news
Explore Moneycontrol
