Steel prices in China have softened by $15-25 on select products, largely on account of quotas on Chinese steel imports drawing to a close.

Industry sources said, with the end of quotas in October there was only requirement based buying at present and most of sellers were also holding back.

Better priced deals were possible in the next few weeks before new quotas were announced in end-October or early November.

Even during April-May, the prices had softened while the industry was awaiting the new Chinese quota due in May, which ultimately led to a downward revision of prices in the domestic market.

Vinod Garg, director of Ispat Industries, pointed out that during April, May and June this year steel prices had declined by around Rs 3,000 per tonne in the domestic market.

However, steel producers brushed aside the impact of softening in China on the domestic industry this time around.

They said, this was a mid-term correction and there was no cause for worry as consumption in China was unabated.

In fact in the first three months, January-March 2003, Indian exports of finished steel to China was at $293.84 million as compared to $262 million for 2002, as a whole.

According to data provided by the Joint Plant Committee, out of exports of 3.7 million tonne in 2002-03, China alone accounted for 1 million tonne.

Within the overall 10.18 million tonne of steel import into China for the current period, India has been given a quota for 180,000 tonne of hot rolled coil and 400,000 of cold rolled coils.

Moreover, reports suggest that China's own capacity expansion would not take off for another two years, which implied that China would have to depend on imports, till that time.

Industry sources pointed out that it was the United States market which would be pivotal for the industry.

"If the US marketed opened up in the third and fourth quarters then it would be boomtime for the steel producers or, else the market would be flat" said sources.

Garg also said that a close watch had to be kept on Russian imports. Though the volume of imports flowing into the country were at the same level as last year, the prices were lower.

If, imports came in at a cheaper price than the ruling domestic prices, then the domestic prices would head for a downward revision.