Steel prices fall but Chinese demand key

Posted on 08 March 2021

Steel prices appear to be heading down after some large manufacturers have cut prices of hot-rolled (HR) and cold-rolled coils by up to ₹1,500 a tonne in the first week of March. This is the first significant price cut in the past nine months and comes on the back of slight lull in domestic demand in the last fortnight of February 2021.

Mint reported in February that steel prices are expected to fall by as much as 10% from their January highs over the next few months, due to a softening of input costs, iron ore, and increased competition from cheaper imports with India cutting customs duty on steel. Domestic prices of HR coil, a flat steel product, which is used in transport, construction, shipbuilding and capital goods, surged 54% from a year ago in the December quarter amid a robust recovery in domestic demand and mirroring higher global steel prices.

HR coil prices fell by 3% in mid-February 2021 to ₹53,750 per tonne but were still 40% higher from a year ago.

Flat steel prices have fallen due to rising inventories with traders who are reluctant to procure steel at the high price levels since they have sufficient inventories, a slight moderation in demand from auto and pipe makers and a disparity between mill price and trade price, India Ratings and Research said. Domestic rebar prices have also corrected due to a reduction in iron ore prices and increasing production by secondary steel producers.

Domestic rebar prices in mid-February were at ₹48,800 a tonne, 9% lower month-on-month but 38% higher compared to the same period last year. Further, budget announcements reducing the import duty on steel scrap will encourage secondary steel producers to now increase output. This would help improve rebar supply and put pressure on steel prices, the report said. The future trend in prices, however, will be linked very closely to the demand-supply balance in China.

Source : Live Mint