Steel Prices May Fall To Rs 60,000 Per Tonne By March: Report

Flat steel prices may increase by 3-5 per cent in this financial year after a growth of over 50 per cent in 2021-22.

Mumbai:

Steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around Rs 60,000 a tonne by the end of the current fiscal, hitting a peak of Rs 76,000/tonne. is below. A report said that it has increased in the last month.

Crisil said in a report on Monday that prices remain high due to supply disruptions, decarbonization measures globally, particularly in China and geopolitical risks posed by the Russo-Ukraine war, leading to increased raw material costs. has increased.

The report said that prices are likely to improve due to the onset of monsoon next month, which will reduce demand as manufacturing will stall along with possible lower premium realization from exports to domestic mills.

According to Kaustav Mazumdar, an associate director of the agency, the onset of the season of weak demand due to monsoon and less attractive exports means that domestic steel prices should start to ease and eventually move towards Rs 60,000 per tonne by March 2023. . It peaked at Rs 76,000 a tonne in the last month itself, which would still be well above pre-pandemic levels.

Flat steel prices may increase by 3-5 per cent in this financial year after a growth of over 50 per cent in 2021-22. Hetal Gandhi, the agency’s director, argued that despite sluggish demand in January-March, higher input costs and buoyant exports pushed up steel prices.

Moreover, domestic supplies remained stagnant, bridging the gap between global reach and domestic prices, which were once around Rs 15,000 per tonne.

On the other hand, export realization premium increased to $75/tonne in early May. While steel mills made the best use of the rise in global prices, domestic demand started to decline. Rising construction costs and multiple price hikes by companies in the auto, consumer appliances and durables sectors dampened demand in Q4 FY22.

In Q1FY23, domestic demand may see an optical recovery due to low-base, but consumer sentiment remains muted along with higher input costs, leading to postponement of purchase and manufacturing decisions.

Similarly, increased prices and resultant inflationary pressures affected sentiment around the world, ultimately leading to price corrections. Since April, hot-rolled coil prices in Europe and the US have dropped to $1,150-1,200/tonne from a peak of $1,600 in mid-March to $1,150-1,200/tonne.

While domestic exports to these markets will remain high in Q1, a reduction in prices will reduce arbitrage for domestic mills. In short, due to revised quota to Europe and supply constraints to South East Asia, exports will remain in the range of 13-14 million tonnes in the current fiscal.

However, the agency does not see a free fall as myriad uncertainties will limit the fall in domestic prices, which, however, are showing signs of fatigue after a sustained rally over the past two years as the monsoon season begins.

The report attributed the still stable prices to heightened geopolitical risks, which limited the price correction, which began to ease earlier this year.

However, the Russian invasion of Ukraine in late February pushed prices up again on fears of a supply-disruption. In Europe and America, where the impact was greater, prices crossed the $1,600 per tonne mark.

Then rising input costs added to the pain. International coking coal prices rose 47 percent to $670 a tonne in three weeks from $455 a tonne at the end of February as mines were flooded amid high demand from countries traditionally imported from Russia.

While coking coal prices have reached their peak, they continue to be supported by strong demand at $500 a tonne. All this has kept domestic steel prices high. In April, they hit an all-time high of over Rs 76,000/tonne, which is 95 per cent higher than the March 2020 level, when Covid-19 was declared a pandemic. PTI Ben Anu Anu

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