News Room - Steel Industry

Posted on 04 Sep 2015

China dumping steel 25% below local prices: Kalyani Steels

Below is the transcript of RK Goyal’s interview with Nigel D’Souza and Reema Tendulkar.

Nigel: You have been telling us that things are not looking that great, etc but at least a bit of a positive surprise or a positive move is what we saw yesterday because NMDC have cut the prices on lumpy ore by close to around Rs 100 and on calibrated lump ore (CLO) they have cut by around Rs 400. What kind of benefit can we see on your margins? You have been telling us 18-19 percent is difficult, do you believe now it will be easily achievable?

A: NMDC has reduced the price. It is a very welcome move; they also feel that there is a need to reduce the prices. However, Rs 200 or Rs 100 reduction in lumpy ore or fines translates into only Rs 150 in the final price of steel, which is hardly anything as compared to the price of imported dumped material in the country where the difference is almost 25 percent.

Reema: Despite the raw material price cut, there is no scope for domestic steel prices to come down?

A: We would not like to reduce any price rather increase it so that we are able to protect our margin and service at least the interest. Today the industry is in such a situation, it is in such a heavy stress that it has become very difficult to service the interest, forget about the repayment of the capital.

Reema: If imported steel prices are 25 percent lower than the domestic prices, you indicated that imported steel is being dump, where is the scope to go ahead and increase prices?

 

A: You are right that there is no scope of increasing prices but we are trying to find ways and means, talking to our customers. As of now we have no confirmation from anybody.

Nigel: We are talking about iron ore prices but what about iron ore availability? We have been seeing in Karnataka that the sales have been moving higher, at least NMDC's numbers indicate that. What is the current iron ore that is available in Karnataka and also what capacity utilisations are you functioning at currently and are you looking to move to?

A: Total availability of iron ore is at the rate of around 22 million tonne per year in Karnataka which at its peak used to be around 55 million tonne and the total requirement of Karnataka is around 35-36 million tonne. In the process, since the prices of raw materials are high and because of the dumping of the material, many of the plant have closed down or are operating at a much lower capacity utilisation. Therefore, Kalyani Steel is also operating at a capacity utilisation of around 70 percent. Since the total capacity utilisation of industry is much lower and hence accordingly the conjunction of iron ore has gone down.

Kalyani Steels stock price

On September 03, 2015, Kalyani Steels closed at Rs 129.90, up Rs 3.00, or 2.36 percent. The 52-week high of the share was Rs 179.10 and the 52-week low was Rs 103.00.