Although domestic steel prices are continuously reducing since July 1st 2008, the comparison of fall when compared with reduction in global levels points to a scenario, where in during November and December Indian domestic prices are likely to crash further to maintain parity with global levels

Both Indian domestic and global price levels were at peak during early July, although Indian domestic levels, due to Indian government’s drive to tame inflation, were suppressed by about 10% as compared to global levels

Since than the fortunes of both global as well as Indian steel industry has changed to a large extant. Now almost every steel maker is facing daunting task of sales realization to cover their variable costs and failing to book orders.

The variation over last 4 months for Indian domestic steel prices is reflected in the indices developed by SteelGuru.com

ILPPI – Indian Long Product Price Index
IFPPI – Indian Flat Product Price Index
INDSPI – Indian Steel Price Index

It is clearly reflected that long product prices in India have come under much more pressure so far and have reduced by about 32%, whereas flat product prices have gone down by only 15%.

Category wise changes are given below

Long products

Flat products

But, when we look at the global pricing trends, which are dominated by FOB levels at Black sea and China, it is seen that the price crash has been much more severe.

FOB Black Sea

FOB China

Although these levels are still reducing week over week, even if we assume that they have reached the bottom, the price reduction on average has been as under
Long products – About 70%
Flat products – About 55%

During last 4 months, Indian rupee has weakened a lot and has affected the import parity pricing. The change in exchange rate for 1 USD to INR is as under

Thus, to arrive at import parity pricing for Indian domestic prices, we need to take into account the suppressed levels of domestic prices in July beginning as well as exchange rate fluctuation.

Indian steel majors including Steel Authority of India Limited, JSW and Essar Steel have announced major price reductions for November, which in all likelihood would result in market prices across India in coming weeks.

To know the actual price levels on daily basis, please subscribe to service of www.steelprices-india.com

(Sourced from www.steelprices-india.com)

PTI reported that following the footsteps of Indian steel giant Steel Authority of India Limited, which announced steel price reduction on November 1st 2008, some other steel majors have also announced price cuts.

JSW Steel Ltd has cut the cost of its hot rolled steel coils by 15% to 17%. JSW Steel said in statement said that “We are reducing prices of HR Coil by INR 5,500 per tonne for November 2008 in line with prevailing international prices. This cut along with the 8% to 12% reduction in October 2008 amounts to an overall reduction by 25% to 30% as compared to peak prices in the domestic market.”

Essar Steel also slashed retail prices of steel by INR 4,000 per tonne to INR 5,000 per tonne. An Essar Steel spokesperson told PTI that "We have slashed prices by INR 4,000 per tonne to INR 5,000 per tonne in the retail segment.”

The slide continued unabated although it was more pronounced in flat but relatively stable in long. The FPPI fell by 354 points whereas LPPI remained stable. The overall steel index fell by 162 points:

ILPPI – Indian Long Product Price Index
IFPPI – Indian Flat Product Price Index
INDSPI – Indian Steel Price Index

The lowest values, after a continuous slide from August 5th 2008, are as under:

ILPPI – Indian Long Product Price Index
IFPPI – Indian Flat Product Price Index
INDSPI – Indian Steel Price Index

Long products

Flat products

To know more about these indices please visit
http://steelprices-india.com/spi_services/spi.html

Input materials
Domestic prices for all kinds of input material declined:
Melting scrap
80:20
HMS

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Alang

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Pencil ingot

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Pig Iron

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Sponge iron

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Long products
TMT
Fe 415
12mm

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

WRC
SWR14
5.5/6

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

ANGL
GR A
65x6

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

CHNL
GR A
75/100

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

JSTI
GR A
250x125

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Prices are expected to go down further.

Flat products

HRC
Tube
2.5x1250

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

Patra

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

PLTS
GRA
8x1.5

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

PLTS
GRB
12-20x2.5

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

CR
DSK
0.63x1000

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

GC
100Gms
0.4

Change on October 31st is with respect to prices on October 24th
Change is in INR per tonne

If you want to know the prevailing prices and changes across the week on daily basis, please subscribe to services of www.steelprices-india.com

ET reported that India Government's decision to cut export duty by 15% on long steel products, mainly used in the construction sector, got a mixed response from the steel industry.

While a section of steel producers feel the move would not help the industry much as it has come at a time when demand and prices of the alloy have nosedived in global market due to financial recession, others contend it saying it would open up avenues for foreign shipments.

Mr SK Roongta chairman of SAIL said that "The duty roll back would not have a substantial impact, as volume of exports of long products from India is minimal."

Nevertheless, he termed the move as a right one saying it would provide a little respite to the industry, which can think of exporting some quantities.

Mr PK Bishnoi CMD of RINL said that "It is a welcome move. We had made a request for this to the government keeping in mind the unprecedented situation in the world, which has also affected the Indian steel sector."

He however added that much more needs to be done by the government to give a fillip to the domestic steel industry, which is passing through toughest of the times due to slump in demand and falling prices.

Industry watchers however said that the duty roll back would to some extent benefit producers like SAIL, RINL and TATA Steel, which account for 30% of the total market in the organized sector.

JSW Steel Ltd has laid the foundation of an integrated steel unit at Salboni in West Bengal to produce 10 million tonnes of steel by 2020. The project on a free tax zone would entail an investment of INR 350 billion in three phases.

The inauguration of the project at Salboni, which is about four hours' drive from Kolkata in an economically backward district, was marked by a huge presence of cadres of the ruling communists in West Bengal. Mr B Bhattacharya chief minister of WB, Mr Ram Vilas Paswan union steel minister and Mr Nirupam Sen state industry minister were present on the occasion.

Mr Sajjan Jindal vice CMD of JSW Steel told reporters that "We would produce three million tonnes of steel by 2012 from the unit when it goes on stream, followed by 6 million tonne by 2015. We will reach our target of producing 10 million tonnes of steel by 2020."

JSW project faced no protest over land acquisition after the steel maker offered farmers jobs and shares in its unit JSW Bengal Steel. The company has acquired 4,500 acres of land for the plant. Mr Jindal said that "We are against forcible land acquisition from farmers. We started work with support of the villagers.”

JSW Steel owns 89% of the equity in the venture and remaining is held by the state government.

It is reported that Essar Steel Algoma and its largest union to agree on a strategy to avoid layoffs appear to have soured. Union leaders charge the steelmaker has gone too far in asking for permanent contract changes.

Mr Mike DaPrat president of United Steelworkers Local 2251 representing roughly two-thirds of Essar Steel Algoma's total work force told members that he is not willing to budge on a list of company requests. He said that those include what appear to be lasting changes to an income security plan that shores up employment insurance payments for those laid off.

Mr DaPrat said that "If they want to talk about getting help from us, we're there, but if they want to talk concessions permanent, we're not." He added that the union and the company were to have met Friday morning to take another look at what is on the table.

Mr DaPrat said that no 2251 members have been laid off and the company has given the union no information on when or how many workers, if any will be laid off.

In a move that might anger some steelworkers, Mr DaPrat told members he is prepared to do away with 12 hour shifts, which are allowed under the collective agreement and are seen by some workers as a way to make the plant's 24 hour schedule more palatable.

As per report, it has been three weeks since Essar slowed production in reaction to a drastic cut in orders precipitated by a global financial meltdown that still has world markets reeling. In the meantime, the company has removed outside contractors and slashed overtime for existing workers under a plan that has also included the idling of the recently refurbished No 6 blast furnace.

(Sourced from SooToday.com)

Following is the text of the remarks by Dr Manmohan Singh PM of India at the ASEM Summit at Beijing

Dr Manmohan sing said that the international financial crisis has resulted from three failures:
1. A regulatory and supervisory failure in major developed countries
2. A failure in risk management in private financial institutions
3. A failure in market discipline mechanism

He said that “These are not my views but those of the distinguished MD of the IMF with which I agree. We must analyze objectively how and why these failures have occurred with such ferocity. This is necessary to put in place a new set of rules which will prevent reoccurrence of such failures.”

He said that “Sad truth is that in this age of globalization we have a global economy of sorts but it is not supported by a global polity to provide effective governance. He added that the resulting crisis of liquidity, accumulation of bad assets, shortage of capital and collapse of confidence threatens to spill over into the real economy by way of reduced demand for goods and services particularly exports, reduced access to trade and suppliers credits superimposed on other crises food and fuel price rises that have strained budgets and balance of payments leading to rising inflation and living costs in many developing countries.”

Dr Singh added that “The President of the World Bank has identified at least 30 developing countries whose balance of payments will experience a severe deterioration in the wake of this financial crisis. The immediate task is to de clog the credit markets the world over. Coordinated global action is essential to restore a measure of confidence in the credit markets. From the standpoint of developing countries, international financial institutions, particularly the IMF and World Bank need to put in place exogenous shock facilities to provide assistance to the affected countries more quickly and in larger amounts with less service conditionality and greater flexibility. Countries with strong foreign exchange positions could make additional resources available to the international financial institutions on appropriate terms to finance their operations.”

Dr Singh said that “As a counter cyclical device, increased infrastructure investments in developing countries, if backed by increased resources flows from multilateral financial institutions such as the IBRD and Regional Development Banks can act as a powerful stabilizer. The IMF should revisit the potentially powerful instrument of creating liquidity through fresh allocation of Special Drawing Rights in favour of multilateral development finance institutions.
The reform and reconstruction of the financial system has to be a collective international effort since borders no longer confine financial institutions or can keep out financial turmoil. Given the growth in cross-border investment, trade and banking in the last three decades, the world must ponder over the need for a global monitoring authority to promote global supervision and cooperation in the increasingly integrated world in which we live.”

In devising a reform agenda, one must bear the wise saying of John Maynard Keynes regarding the economically damaging role of excessive speculative activity that “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a byproduct of the activities of a casino, the job is likely to be ill-done"

He added that Clearly, there has been a massive failure of regulatory and supervisory powers. Speculators have had a free run for far too long a period. International institutions like the IMF have also not covered themselves with glory. There has been an unacceptable failure of effective multilateral supervision of major developed economies and in particular of what has been going on in their financial markets.”

He concluded that “India’s banking system is sound and well capitalized. It is not exposed to the type of assets which have given rise to this crisis. Our real economy will grow at the rate of 7% to 7.5% this year despite the global slowdown of export demand and capital inflows. We have injected fresh liquidity in the system. We realize that we cannot remain totally unaffected when the global economy and financial system are in deep trouble. Our stock markets and the exchange rate of the rupee are under pressure due to capital outflow of foreign institutional investors. Sooner or later, the real economy is bound to experience the pain. We are therefore sincere in our desire to cooperate and coordinate our actions with the world community to find effective and pragmatic solutions to the formidable challenges the world economy is now faced with.”

PTI reported that Indian government has turned down the request of steel producers to persuade state run miner NMDC Ltd to roll back last month’s price hike on iron ore, saying it cannot intervene in the commercial decision of the PSU.

Steel ministry in response to the joint representation of companies like Isp