Mr P Bhattarcharya joint MD of Usha Martin in an interview to CNBC TV18 said that he believes that prices of steel and steel products will increase significantly.
Mr Bhattarcharya said while manufacturers in the West had cut capacity during the downturn, demand is now seeing signs of picking up and the reduced capacity can’t keep up pace. He said that “I expect in about three months time, steel prices and steel product prices will go up significantly.”
When asked how you are expecting your product prices to pan out from hereon and are you expecting that you have the scope to raise product prices and by what percentage in the next quarter, he said that “We have to look back a little before commenting on the price for a minute. One year back when this problem the financial structure cracked down buyers stopped buying and the inventory was enormous because of the previous buoyant economy. When consumers stop buying, manufacturers tried to liquidate inventory, stopped production mainly in the western world: US, Japan and Europe.”
He said that “India and China however continued to increase production because the internal consumption justified it. You have two scenarios: you will see China and India will have stable price, prices will not go up because demand has been matched by increased production while in the western world US and Europe after the de-stocking people now find that the world has not really collapsed. There is some improvement and now demand is coming back but the supply chain can’t be switched on. Action can be stopped and restarted in one day but the supply chain from a manufacturer if the blast furnace is stopped it doesn’t start in one day.”
When asked so what kind of rise do you still expect, he said that “Prices will go up in Europe and US and that can be cooled off by export from the steel producing country. If that is done, there will be a global correction. So, I expect in about three months time, steel prices and steel product prices will go up significantly. I am not talking of the previous level but I am saying considerably higher than the pessimistic view all of us have says.”