Steel prices in the domestic market are expected to decline by around Rs.1,000-1,500 per tonne soon. The downfall of Steel prices is said to have triggered due to subdued demand and excess production capacity.
“International Steel market is weak, we have no option but to either reduce our prices or reduce our production capacity”said one of the manufacturers based in eastern India.
Global steel prices are hovering in the range of $520-540 a tonne. The erstwhile premium of $40-60 a tonne commanded by domestic steel producers has actually gone up to $65-70 a tonne thus making the domestic selling price unsustainable. This warrants a price reduction and hence the expectation.
During the current year the steel prices have declined dramatically also due to a surge in Chinese steel production. As China is by far the single largest steel producer in the world, accounting for approximately 47% of global production in 2009, this overproduction of steel and the corresponding decline in prices have had a significant effect on the Indian markets as well. Chinese steel prices were approximately $500 per tonne, rising to a peak of $700 per tonne in early April.
However, overproduction has led to prices falling back to $550 per tonne by mid-May. Moreover, Steel is being imported almost half a million tonnes per month which also has impacted the long and flat variety of Steel too. The global economic slowdown hampered the growth curve of various Steel intensive industries such as construction in 2009 and its impact also fell on Steel demand. However, the government is proactive to boost economic growth by injecting funds in various industries like construction, infrastructure automobile and power will help the Steel industry to again achieve its previous growth trajectory.
Source: Commodity Online
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