Steel prices set to toe firm global trend

Suresh P Iyengar Mumbai | Updated on February 25, 2021

Higher raw material prices and revival in global demand holds the prices firm

The Government’s intent to put pressure on steel companies to cut down on prices by allowing duty-free imports seems to be having its impact despite the Budget proposals coming into effect from April 1.

But the rising steel prices in the global market is helping domestic companies to pass on the incremental cost to end users. For example, steel long product (used in constructions) prices were cut by about ₹8,000 a tonne in the first week of this month but they have rebounded by ₹3,000 on the back of buoyant demand.

Chinese demand

On the other hand, hot-rolled coil prices which had rallied by 55 per cent since last July to ₹54,867 a tonne in January ruled stable, awaiting signals from China which resumed economic activity after its Lunar New Year.

While steel prices in China declined due to a drop in demand last month, they increased sharply in the US and UK due to demand recovery. Hot-rolled coil export prices in the global market have surged 74 per cent since last June to average $730 a tonne this month.

The cost of steel production in India is higher compared with global companies due to high costs of funding and creaking infrastructure, said a CEO of steel company, opposing duty-free imports.


India turned out to be a net importer of finished steel in January for the first time this fiscal as demand outstripped production by 59,000 tonnes.

The gradual unlocking of economy has improved overall economic activities leading to a revival in domestic steel demand.

Steel exports from India grew by 22 per cent in the first 10 months of this fiscal, while imports fell by 37 per cent. India was a net exporter of finished steel until December 2020.

Raw material prices

Globally, iron ore prices have spiked to 10-year high last month to an average of $170 a tonne and are up 55 per cent since last June due to supply constraints.

In India, NMDC has cut lumps with 65 per cent iron content to ₹5,100 a tonne for this month from ₹5,700 in Janaury, while that of fines has been reduced to ₹4,210 a tonne from ₹4,810 (excluding taxes and other levies).

Hard coking coal prices have swung wildly hitting a high of $150 a tonne and a low of $114 due to cyclone in Australia. Coking coal prices have dipped from $159 per tonne in March last year to $102 in December last year as China curbed imports from Australia. Indian companies import about 70 per cent of coking coal requirement from Australia.

Published on February 25, 2021

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