Domestic steel prices could increase by over Rs 1,000 per tonne in December, the first rise in six months, propped up by a strong revival in international prices and improvement in demand from infrastructure and housing sectors, according to industry executives. “We are seeing signs of an improvement in demand since November and this has given us scope for price correction. However, we would prefer to calibrate the prices in step with a gradual recovery in demand,” said a top marketing executive of a steel manufacturer based in eastern India. The sentiment was echoed by more executives working in other steel mills in the country. “Major steel players are looking at a moderate price recovery of Rs 1,000-1,500 per tonne in December on the back of a small price correction last month,” said a senior executive of a Mumbaiheadquartered steelmaker. The October-March period traditionally represents two strong quarters for the steel industry, as construction activity generally picks up in the post-monsoon period.
“This year, in addition to the seasonal impact on steel demand, a major contributing factor is the improvement in global prices by almost $40/ tonne. With a weak exchange rate, this translates into a higher price increase at home. However, domestic prices are yet to improve in tandem, since demand, though improving, is yet to catch up,” one of the executives cited earlier said.An increase in price will improve the prospects of medium and large steel firms, including Tata Steel, Tata Steel BSL, JSW Steel, Essar Steel, Steel Authority of India and JSPL. Prices have been falling since May due to sluggish demand from infrastructure and construction sectors, and drop in orders from the slowdown-hit auto sector. Benchmark global prices are based on rates of key flat steel items like hot rolled coils (HRC) which go into making of automobiles, consumer durables and construction materials. From a high of Rs 44,000 per tonne, HRC prices had plunged to, what industry executives termed as “unsustainable”, levels of Rs 34,000 per tonne.
Source : https://economictimes.indiatimes.com