The Hindu Business Line : Steel stock falls after China co cuts prices

STEEL companies' stocks fell today after China's Baoshan Iron and Steel Company cut prices of its core products by an average of more than 10 per cent to around $430 a tonne.

These prices would be effective in the first quarter of 2006.

Some of the stocks that fell on Tuesday are Tata Steel (down 2.65 per cent at Rs 350.90 on the BSE), SAIL (0.6 per cent at Rs 50.10), JSW Steel (3.01 per cent at Rs 211.25), Essar Steel (3.09 per cent at Rs 42.30), Jindal Steel (1.21 per cent at Rs 1,450.20) and Ispat Industries (8.63 per cent at Rs 11.75).

Analysts said the cut in steel prices by Baoshan Iron and Steel could lead to fall in steel prices in the domestic market. The cut in steel prices by China's sixth largest steel producer was more than expectation.

"Steel prices have been on downward trend as the Chinese production is increasing," said Mr Bhavin Chheda, Senior Analyst, Pioneer Intermediaries, a stock broking firm.

Steel production in China increased by 19 per cent in October to 31.7 million tonnes compared with the corresponding period of last year. In the first 10 months of this year, the production in China has increased 27 per cent to 287 million tonnes.

An analyst with a foreign broking firm said Baoshan Iron and Steel's cut in steel prices could lead to subdued steel prices globally for the next quarter. He said the landed cost in India is lower than domestic prices and that could lead to domestic players cutting steel price in next fortnight.

International steel prices have fallen by 30 per cent from peak level touched in March this year.

Brokers said the cut in the steel price indicates pressure on steel demand. "There has been increase in steel production in China, but the demand is not keeping the pace and this is leading to fall in prices," said a dealer with a domestic broking firm.

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