JSW Steel has adopted a flexible pricing policy for its long products used largely in real estate and infrastructure projects from the current practice of fixing it on monthly basis.

The company is now willing to change long product prices on a daily basis against the industry practice of fixing it on a monthly or fortnightly basis.

Jayant Acharya, Director (Sales & Marketing), told BusinessLine that of late there is huge volatility in pricing of long product with huge imports flooding the market and no revival in demand.

“When secondary steel producers, who dominate 65 per cent of long product market share, open prices on a daily basis we cannot fix it at the start of the month and say, we cannot sell below that price. We need to be flexible, particularly when we have to compete with cheap imports,” he said.

The recent trend of large scale imports from China, Japan and Korea has changed the dynamics of the market. The demand for long products has remained sluggish for the last few months due to lack of large investments in infrastructure projects. Importers are willing to undercut prices whenever they spot little demand.

Steel imports registered a sharp increase of 71 per cent to set a new record of 9.31 million tonnes in the financial year ended March against 5.45 million tonnes logged in the same period last year, said the Joint Plant Committee, a unit of the Steel Ministry.

Iron ore impact

The integrated steel producers such as SAIL, Tata Steel, Essar Steel, JSW Steel and Jindal Steel and Power together produced 45 million tonnes in 2014-15, up 2 per cent compared to last year.

Other steel companies output increased 14 per cent to 43 million tonnes in the same period, the report added.

“We expect the long product demand to revive in a couple of months when the State Government starts spending on infrastructure projects,” he said.

The competitive edge of steel makers in India is eroded due to high domestic iron ore prices compared to that prevailing in the international markets, largely due to supply squeeze and restriction on iron ore mining.

In the last one year, iron ore prices abroad have plunged by over 60 per cent to the current level of $118 (₹7,300) a tonne.

The largest iron ore supplier in India NMDC had reduced prices by about 28 per cent to ₹3,250 a tonne. Iron ore fines prices are down 15 per cent to ₹2,460 a tonne in the last one year.

Steel companies are finding it difficult to import iron ore as very few ports in India have the adequate infrastructure to handle bulk commodities.