Steel Prices in the month of June and July.

New Delhi, Mumbai: The rapid increase in steel prices over the last few months is starting to cool off due to weak demand, a temporary phenomenon.

Industry experts and analysts believe that prices may soften in June as the demand is weakening due to the cyclical monsoons. Moreover, with jitters in the global economy returning, steel prices across the world, especially Europe, has started to ease.

Last week SAIL chairman, S K Roongta said, “In the last three to four weeks, global steel prices have weakened to the extent of $80 -100 per tonne. It is a natural phenomenon that if prices in international markets reduce, steel prices will be impacted in India also.”

Steel secretary Atul Chaturvedi said, “Prices of steel are likely to come down in June due to softening demand in the international market, mainly due to European crisis. The onset of the monsoon will also have its impact on the prices as construction activity slows down during this period.”

Steel prices in India are currently ruling in between Rs 26,000 to Rs 30,000 per tonne and are expected to ease off from June. Tata Steel, however, sees no impact on steel prices and believes that prices will remain stable. Koushik Chatterjee, group CFO, Tata Steel, last week, said that the steel prices are expected to remain stable at current level. He said, “We don’t see prices going down from these levels as higher raw material costs (coking coal) kicks in from this quarter.” Giriraj Daga, research analyst, Khandwala Securities said


Tata Steel indicates rise in steel prices

Tata Steel, the world’s sixth largest steel producer, today hinted at increasing the prices of steel.

Balasubramanian Muthuraman, Managing Director of the company, said the rise in the input costs would be passed on to the customers.

“Globally, raw material prices have gone up. If producers don’t pass on the price increase, their margins will be affected. We are hoping that we’ll pass on the increase in raw material cost,” said Mr. Muthuraman.

He said though the demand for steel both in the domestic and international markets is growing, the cheap imports from China, which has overcapacity, continues to be a challenge.

He, however, declined to indicate the quantum of the proposed increase in prices and when would it come into being.

“There are positive trends in the international markets such as the U.S. and Europe. China has overcapacity and we anticipate that the cheap imports will continue. It will have an impact on the domestic market.” he said while speaking to the media on the sidelines of a conference organised by Administrative Staff College of India here.

Recently, the state-run National Mineral Development Corporation (NMDC) has increased the prices of iron ore by 11 per cent based on the international market trends. The company has indicated that prices would be revised on a quarterly basis.


Steel prices may come down by Rs 1,000/tn in July

Domestic steel prices may come down by as much as Rs 1,000 a tonne this month due to sluggish demand mainly from the construction and infrastructure space.

“In July, steel prices are likely to fall by Rs 1,000 a tonne mainly due to lack of demand from infrastructure firms amid the monsoon season,” Steel Secretary Atul Chaturvedi told PTI.

Domestic steel makers are yet to announce any price changes of their products.

High cost of raw material, fall in demand and cheaper global rates are putting pressure on domestic steel prices and analysts say the trend could well hit the margins of domestic companies in the current quarter.

“The same trend is likely to be witnessed during the present quarter,” Chaturvedi said.

Joint Plant Committee Chief Economist A S Firoz had earlier this week said that the July-September period will see erosion of profitability of steel companies as the gloomy demand scenario would prevent them from hiking rates amid high input cost pressure. He described the second quarter as “the weakest link” for the industry in the current fiscal.

Steel firms have seen prices coming down by up to Rs 6,000 a tonne to around Rs 27,000-33,000 a tonne in past few months as construction work slowed down ahead of monsoon.

Anticipating a hit on their bottomline, steel makers like Tata Steel, Essar Steel and JSW Steel are looking at increasing price in some segments in the current month.

Prices of raw material, coking coal and iron ore, are at present ruling around 50-100 per cent high. Spot iron ore prices are ruling at around USD 100-115 a tonne and coking coal prices at around USD 185 a tonne level.