zinc to 3700t

21 September 2006

Expect zinc prices to be in USD 3,700 range: Uttam Galva

Uttam Galva Steel is in news because the company has announced that they will be hiking galvanised steel prices by about Rs 1,000 a tonne, with immediate effect. There is buoyancy in international prices, which does hold an argument for this increase.

Director of Uttam Galva Steels, Ankit Miglani says that steel prices have come off from their highs, but they have stopped falling and have leveled off.

He adds that they foresee zinc prices to go up much faster and expect it to be closer to the USD 3,700 odd range.

Excerpts from CNBC-TV18's exclusive interview with Ankit Miglani:

Q: Explain to us really the rationale behind increasing prices now, given that steel is a raw material for you and zinc has seen some amount of cooling off in the month of September?

A: You are absolutely right. There was some sort of cooling off at the beginning, but we must realise that the actual pricing is done on monthly averages and on global demand supplies. On a day-to-day basis, one might see some slackening in prices, but if one looks at it on a monthly perspective, the prices have actually been consistently going up over the past few months.

As far as steel is concerned, the prices have come off from their highs, but they have stopped falling and have leveled off.

We are seeing an increase of USD 30-USD 40 per tonne over the past couple of weeks. This is primarily because of the fact that Chinese export rebates have been cut, so their exports have become less competitive in the global market. That has a direct impact on Indian steel industries because we have only a 5% duty now and anything that happens in the world affects the Indian steel industry directly.

Q: Today internationally zinc is quoting at about USD 3,360 per tonne level. You have hiked prices by Rs 1000 at this point in time. Going forward, how many more hikes are likely to match these international price levels?

A: The zinc price today is really less relevant. It is more important to see what is the average for the whole month, because that is how the real pricing is done. If zinc stays at these levels, the average price will be higher than last month's average zinc price. But we foresee zinc to go up much faster. We expect it to be closer to the USD 3,700 odd range in which case we would expect much stronger increases in galvanised prices also.

Q: Could you quantify that?

A: It depends on the exact quantum of the zinc price increase, because zinc is probably a 7% input cost for galvanised steel. According to that ratio, the prices of galvanised steel would keep increasing.


d.