Indian Steel Prices To Soften In The Near Term
Indian steel prices are expected to soften in the near term, tracking global rates that are showing signs of weakening ahead of the Lunar New Year holidays in China and due to a fall in domestic iron ore prices, analysts and industry executives said. Domestic hot-rolled coil (HRC) prices rose about 54% during July-December 2020, on the back of a strong recovery in domestic demand and a sharp gain in international steel prices that increased 56%. While the prices increased further to Rs 58,000 a tonne in January, resistance from user industries led to a roll back of some of the hikes. It is now trading at Rs 56,000. As per analysts, the CR-Grade HRC prices in China have dropped from $710 per tonne to $660-670 this month. Industrial activity usually dips in China around the Lunar New Year. As per a recent report by ratings firm ICRA, Chinese export HRC prices had dropped 10% in January due to lower domestic demand during the winter months of November-March. At current prices, the landed HRC prices from China at new duty rates are trading at a 10% discount to domestic HRC prices, it said. Another factor that could lead to a fall in domestic prices is the cost of iron ore, which is coming down. Some of the issues related to iron ore are also easing out from the availability perspective. State-run miner NMDC has reduced prices. Prices had gone up from around Rs 1,960 per tonne to Rs 4,860 in December. Now, these have reduced by Rs 600 a tonne. The customs duty reduction announced in the budget is also expected to bring down HRC prices by another 10% in the near term. While a supply increase might bring down the price in the near term, companies and analysts are positive about demand.