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Steel prices are set to go up by ₹2,000 a tonne to ₹40,000 from April on the back of a revival in demand and rise in iron ore and coal prices. In fact, the prices have already risen by ₹300-500 a tonne in the past one week.
Steel demand is picking up slowly after suffering for the last four months following the government decision to demonetise high-value currency as part of its fight against black money.
Large steel-consuming sectors such as real estate and infrastructure were the worst affected as a major portion of their business is driven by cash transactions.
However, the government's increased spending in social and infrastructure projects has pulled these sectors from the slump faster than expected.
“We have already hiked prices by ₹300-500 a tonne in the last one week on rising demand and that will cover the rising cost. Stockists who were postponing their purchases on expectations that prices will fall are back in the market as they have almost exhausted their inventory,” said a senior executive of a steel company.
Apart from buoyant domestic demand, the restrictions on steel imports from China has opened new opportunities for Indian companies.
In the last 11 months, steel exports from India have surged almost 78 per cent to 6.6 million tonnes.
Iron ore and coal prices have jumped substantially due to strong demand from China, which restricted both steel and coal production to curb pollution.
China factorChina’s National Development and Reform Commission said that it targets to cut steel capacity by 50 million tonnes this year and coal output by over 150 million tonnes. The move is part of the overall plan to cut steel output by up to 150 million tonnes and coal production by 800 million tonnes by 2020.
However, crude steel production in China was up 5.8 per cent in the last two months to 129 million tonnes on the back of strong domestic demand, according to data released by the National Bureau of Statistics.
The country’s domestic inventory was down 7 per cent to 15 million tonnes.
The buoyant domestic steel demand in China may lead to further rise in iron ore, coal and steel prices globally.
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