NEW DELHI (Commodity Online): Steel Authority of India (SAIL) has decided to slash prices of flat steel products sold in the spot market by up to 3% or Rs 800/tonne owing to mounting threat from low-priced imports.

Other steel producers, including Ispat, Essar and JSW, are likely to follow suit this month. The new prices effective December will bring down raw material costs for car, television and fridge makers. The move to cut prices is in line with international steel prices that have dropped to $450-500/tonne.

The growing demand for steel is evident from the strong GDP growth in the second quarter. But, the demand is still subdued in several other parts of the world causing prices to come down.

SAIL is looking to cut flat steel prices between Rs 500-800 per tonne. Currently, basic flat steel products are selling between Rs 32,000-33,000 a tonne in the domestic market.

However, prices of long steel products, used mainly for construction, have bottomed out and are expected to stabilise at the current level.

Steel prices in China, the largest producer and consumer of steel globally, had fallen 25% to $450 per tonne early last month after hitting a high of around $620/tonne in August. Following the crash, several large domestic steel companies reduced prices by up to Rs 1,500 per tonne during November 2009.

Even as demand from key steel consuming sectors, led by infrastructure and automobile is robust, Indian steelmakers fear that higher imports of low-priced steel into the country could adversely impact consumption of domestically produced products, which have already become dearer with appreciation of the rupee against the dollar.

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