Steel prices rise as demand perks up

Responding to cost pressure and greater demand, domestic steel producers have raised prices by Rs 1,000-1,500 a tonne across products for January. Iron ore miners have increased prices by Rs 600 per tonne and so this increases the cost of production by Rs 1,000 a tonne.

With this, domestic steel players have raised prices for the fourth consecutive month in a market in which consumption is expected to pick up after the government announced a mega push for infrastructure projects. Stock prices of all steel firms were up on Thursday in anticipation of rise in demand for the commodity, mainly from the infrastruct­u­re se­ctor, in coming months.

During October-December, long product producers such as JSPL and SAIL have recorded strong production figures, indicating a demand pick-up in infrastructure. JSPL recorded 30 per cent sales growth in the December quarter at 1.66 million tonnes compared with the same period in the previous financial year.

Steel prices recover, but no signs of increment in demand.

Steel firms have hiked domestic prices following a rise in international rates. In fact, domestic hot rolled coil steel prices have risen by about 3% in the past two months. Prices of bars have also increased by as much.
Demand growth for steel slipped into negative territory in the first two months of Q3 FY20, recording a fall of about 1.8% year-on-year. It has steadily decelerated throughout the current fiscal, declining from 6.9% YoY in Q1 FY20 to 3.1% YoY in Q2 FY20,” it added.
Further, steel consumers such as auto and infrastructure, continue to reel under a slowdown. There are no visible signs yet of demand revival in auto and capital goods sectors.
One positive for the steel sector, however, is that input costs are on the decline. Prices of raw materials iron and coking coal have slipped. Iron ore, for instance, dropped by 15-17% over the past four months, while coking coal prices fell about 32% in the last six months. This should help alleviate the pressure on operating margins.

Steel prices on the verge of recovery

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.

Signs of improvement in demand are being seen since November and this has given scope for price correction.Major steel players are looking at a moderate price recovery of Rs 1,000-1,500 per tonne in December.

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.From a high of Rs 44,000 per tonne, Hot Rolled Coils prices had plunged to, what industry executives termed as “unsustainable”, levels of Rs 34,000 per tonne.