Steel prices dropped below the anti-dumping duty of Rs 34,719 a tonne due to weak demand in the country. In fact, the domestic hot rolled coil (HRC) prices fell to 34-month low of Rs 34,250 a tonne in second week of October raising huge concern to the industry, which was expecting a demand revival in the festival season.

The anti-dumping duty is considered as the floor for domestic prices as steel imports cannot be done below that price level.

The domestic HRC prices have fallen 16 per cent in this fiscal following lacklustre demand from the key end-user industries.

As per the definitive anti-dumping duty imposed on certain flat steel products valid till August 2021, the threshold HRC prices stand at $489 tonnes (about Rs 34,719 a tonne).

Jayanta Roy, Senior Vice-President, ICRA said the series of price cuts taken by domestic steel makers has pushed prices lower than the floor points, heightening concerns about poor demand.

The difference between domestic and imported HRC prices has widened in recent months with the current local HRC prices were trading at a discount of 13 per cent to import prices.

Steel demand growth in September quarter this year dipped to four per cent against 6.9 per cent logged in June quarter and 0.2 per cent lower compared to September quarter last year.

India’s steel demand growth dropped to 5 per cent in first half of this fiscal much lower than 7.5 per cent and 7.9 per cent logged in the same period of previous fiscals. Moderation in steel demand is largely attributable to the weakness in the automobile and construction sectors.

On the other hand, Roy said India’s steel exports, which fell by about 27 per cent in June quarter, jumped almost 34 per cent in September quarter. However, a 12 per cent fall in Chinese export HRC prices since August could act as a fresh challenge for domestic steelmakers looking to augment exports amidst depressed domestic demand conditions, he added.

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