Steel Prices Unlikely To Ease

The record high price of steel may not ease in the second half of the current fiscal with demand expected to spike amid the ongoing second wave of the pandemic that has caused the demand outlook to continue to be weak and uncertain in the first half, a report by rating agency BWR said. The prices of Hot/Cold Rolled Coil (HRC/CRC) prices recently were revised upwards by around Rs 5,000 per tonne, to Rs 70,000 and Rs 83,000 per tonne, respectively. However, domestic prices of steel are lower by 15-20 per cent than landed imported steel. The bull run on prices is not only leading to a cost escalation of the infrastructure, real estate projects, consumer goods and a repeated hike in automobile prices, it is also increasing the input costs of engineering MSME exporters, which also use steel as input material. The temporary curtailment in Indian production on account of the diversion of oxygen for medical use, rise in raw material prices of the iron ore by about Rs 4,000 per tonne and increased freight cost on account of higher diesel prices are some of the supplementary reasons for the hardening of prices local prices recently. The root cause for higher international steel prices is the limitation on exports by China. Most of the Chinese steel is now consumed locally resulting in short supply in global trade.