Economy

Steel prices cooling off by ₹3,000/t

Suresh P Iyengar Mumbai | Updated on July 01, 2021

The second Covid wave has impacted demand from auto and consumer durable sectors   -  REUTERS

Weak demand amid monsoon season to pull down prices

After a consistent rally in the last few months, steel prices have come under pressure and are expected to be cut by ₹2,000-3,000 a tonne next month to ₹63,000 a tonne on the back of weak demand amidst the monsoon season across the country.

While long product prices are expected to come under pressure due to slowing construction activity, flat product prices are facing the heat due to weak demand from the consumption sectors such as automobile, white goods and others.

Moreover, steel prices at the company level have been higher by ₹5,000 a tonne than that of the dealers due to consistent price increase and robust demand. Supply in the market was tight due to higher exports.

In June, the demand has slowed down considerably and inventory at the dealers’ end has increased and this may either force steel companies to cut prices or offer a discount if they decide to hold prices at the current level, said a Mumbai-based dealer.

Long product prices usually come under pressure before the monsoon season, he added.

Output up

Crude steel production increased 46 per cent last month to 9.2 million tonnes after a dip in April due to the onset of the second Covid wave. The domestic steel output has been driven by increased exports and higher capacity utilisation levels than last year.

Steel demand was up two times at 8.63 million tonne in May, on lower base. On month-on-month, it increased 27 per cent on the back of recovery in demand despite the onset of the second Covid wave. Consumption has not fallen to the levels seen last year when there was a complete shutdown of activities.

However, the second wave has impacted auto and consumer durable demand and partially delayed construction and infrastructure activities. Further, the monsoon could dampen construction and infrastructure demand in the coming months.

Published on June 30, 2021

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