Posted on 20 Jun 2022
Following the steel export duty imposition, India’s domestic market has witnessed a sharp fall in steel prices, and sentiment has turned favourable for downstream units. This, however, is impacting large steel producers, who have surplus inventories that can be shifted only in the domestic market. Some are heard preferring temporary shutdowns over selling steel at low prices.
“We got some updates that major finished flats exporting mills will be in a position to decide [maintenance shutdowns] after the second week of June,” a local trading source informs Kallanish. “As such, the market is not seeing any increase in enquiries, not seeing any rush to restock steel in the domestic market … In fact, some of the buyers are out of stock at the moment. Maybe they [buyers] are expecting further price reduction too.”
Mills are meanwhile justifying the shutdowns by pointing out that maintenance is a routine procedure. For them, plunging prices are not as alarming as falling demand. Some firms cannot afford to hold back their inventories as they would lack cash inflow to continue business operations.
“The export duty, imposed to check rising inflation in the country, has resulted in volatile steel prices in the domestic market,” a mill source informed local media. “Now, traders and end-users are deferring large orders in expectation of further price correction. Buyers are dipping into their holding stock to meet requirements. This has resulted in a piling up of finished steel inventory at steel mills.”
“Inventory of finished steel is also piling up at mills as exports have nosedived since the levy of the new duty,” the source added.
Source:Kallanish
