Mumbai: Steel prices have fallen by $30 per tonne in the past two months to touch $290 in India following the pile-up of steel stocks in Chinese ports and the expiry of the import quota license. This in turn is due to the expiry of import quotas issued by China.

The price fall, however, does not affect the scrips of the Indian steel corporates listed on the Bombay Stock Exchange (BSE) as the trend is likely to be corrected with China reissuing quotas from 24 May 2003.

During the past six months, industry sources say, steel prices have jumped over 50 per cent as China, the largest importer of steel, increased consumption. China buys more than 30 million tonnes of flat steel annually, more than the total flat steel capacity of India.

Steel Authority of India (SAIL) officials describe the trend as temporary. "Though the import quotas issued by China expired last month, they are scheduled to issue fresh quotas from 24 May. The build-up is in anticipation of that."

"The impact of China crisis is very marginal on the steel scrips on the BSE — not much fall in the scrips of the listed steel companies. It is expected that by the end of this month the current trend will be changed," says Munzal Shah, an analyst with Sushil Finance Consultants.

During the past two months, the scrips of steel corporates such as Tata Iron and Steel, SAIL, Jindal Steel, and Jindal Iron and Steel are moving at around Rs 130, Rs 8, Rs 73 and Rs 140, respectively.

Industrial Development Bank of India (IDBI) officials say the situation is being monitored by financial institutions (FIs), which, under the corporate debt restructuring, had restructured loans to steel companies on the basis of a price benchmark. "We have quoted Rs 15,000 per tonne as the base price and the current steel price movements is at Rs 18,500 per tonne. It's quite satisfactory."

While prices of hot-rolled steel coils (base-grade steel) have softened, there has been a steady rise in the prices of other commodities used in steel making. Coke and iron ore, one of the basic inputs in steel made through the blast furnace route, have shot up in the last two months.