Steel prices likely to remain stable
Domestic steel prices are likely to remain more or less stable at the current level
despite the fact that some correction in global metal prices is due shortly. Even if
steel prices come down globally, a 15% rise in the dollar against the rupee would
neutralise that mark down in India as the cost of imported steel would almost equal
prevailing domestic prices, say analysts.
In the past two months alone, steel prices in the international market have dipped by
almost 20-25%. There is anticipation that prices would slip even further. The prices
of hot rolled coils (HRC), which is primarily used by the construction and automotive
industries, is expected to come down to the $750-700/tonne mark globally in a
month’s time. Their current price range is $900/tonne.
Says Angel Stock Broking senior research analyst Pawan Burde: "The global pricing
situation would not impact India because steel prices haven’t gone up significantly in
the past few months. In fact, domestic steel prices are in line with international
prices. Even if prices of iron ore and coking coal - key inputs for steel - plunge
further globally, dollar's appreciation against the rupee leaves no room for any
further correction."
Currently, the prices of domestic HR products are hovering between Rs 40,000/per
tonne and Rs 44,000/per tonne. This is after the primary and secondary steelmakers,
including Ispat, Essar, JSW and Uttam Galva, slashed metal prices by up to Rs
2,000/tonne earlier this month, following the global correction.
"Besides monsoon, the plunging oil prices and a recessionary phase worldwide is
pulling down the demand for metal by as much as 5-8%. Globally, prices are falling
and so are market sentiments. This has taken a toll on construction, job losses and
purchases and has shaken investor confidence. We don’t expect a spike in metal
prices at least for a month," says independent steel and natural resources consultant
AS Firoz.
The situation seems to be similar even in China, the world’s largest producer of steel.
"Post-Olympics, price of steel in the country has already plunged to $650 a level.
Even there, prices are expected to remain weak till November," says Religare
Commodities in charge (metals & energy research) Somnath Dey.
Source: The Economic Times
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