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RK Goyal, MD, Kalyani Steel, talks about the effect of steel price trends on broader industry and the high demand from auto sector.
Q: Are you seeing a cooling off of steel prices? What do you believe is the trigger behind this fall?
RK Goyal: We are in engineering steel long product space. And as far as our products are concerned, till now there is not much price increase. Like, we could get a price increase of around Rs 17,000 per tonne as against more than double in the commodity space — whether it is HR coil or some other products.
As far as the demand part is concerned, nickel, steel, etc had dipped in April and May because of very heavy lockdowns. But June numbers were pretty good. We expect a further increase now.
Besides, there is an increasing trend in export of automobile components. So we are seeing good demand. We will have a price increase again and we are going to see a very good period.
Q: You cater to autos in a big way. What kind of demand are you seeing?
RK Goyal: We are fully loaded. We are seeing very good demand — from auto manufacturers as well as auto component exporters. We are seeing very good demand from them. In fact, we are finding it hard to service the orders.
Q: How much of your sales is dependent on exports?
RK Goyal: We export very little directly. Prices are increasing because in Europe and USA as well as in China prices have gone up substantially as compared to India.
As far as indirect exports are concerned, we supply steel and the component manufacturers manufacture auto components and then export. The demand is again very good there.
I do not see any price pressure because internationally the price for engineering steel, alloy steels, have gone up.
Q: Coking coal prices have gone up quite a bit. Do you see that as a threat to margins?
RK Goyal: Coke prices have gone up, iron ore prices have gone up as well. But I am sure we will get an indirect reimbursement from our customers by way of another price hike, which our customers will be happy to pay us.
Q: You said there's so much demand from the auto sector that you are unable to cater to that. Any plans to increase your capacity?
RK Goyal: No, we are already operating at 100% capacity utilisation in both our plants. We are thinking of expanding — we may need to set up a Brownfield or Greenfield project.
Q: Where is this auto demand coming from — pure-play auto companies or ancillary companies?
RK Goyal: As far as passenger vehicles are concerned, I expect demand to be more than around 8% in the current financial year. As far as two-wheelers are concerned, it depends partly on the monsoon, but it will still be at least 6%.
As for tractors, they are doing pretty good. Commercial vehicles industry has been a bit of a laggard thus far, but I am sure after a few months it will come back up again.
Source: economictimes.indiatimes.com
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