Steel prices slip $100 per tonne globally; Indian mills revise prices in May

Abhishek Law | | Updated on: May 17, 2022
VR Sharma, MD, Jindal Steel and Power

VR Sharma, MD, Jindal Steel and Power

Steel prices are witnessing a correction globally, and are down by around $100 per tonne over a three to four week period, amidst fears of a global recession and a continued imposition of lockdown in China in view of rising Covid cases there.

In India, the approximate price of hot rolled coils (HRC) are at around $900 a tonne in May, versus $1,000–$1,010 per tonne in April. For the same period (May versus April) prices in China are down to $720 per tonne from $820 per tonne, and in Japan it is $956 per tonne from $970 per tonne.

Vietnam bucks trend

India’s biggest export market, Vietnam though has managed to buck the trend with HRC prices there witnessing a rise of $20 per tonne (2 per cent MoM) or at $950 per tonne in May from $930 per tonne for April, data collated by Steel Mint shows.

Rebar prices revised

Rebar prices in India are down to $916 per tonne in May, as against $970 in April; while in Vietnam, it is down to $715 per tonne in May versus $850 / tonne in April. In Japan, it is down to $794 / tonne ( $ 800 / tonne). In India, mills have also revised prices for a second time in May, say trade sources.

Prices are down by “around $50 per tonne” (or around ₹3500 per tonne) “at least” over a one month period and a second revision was done mid-May. Rebar prices are expected to come down in the $865 per tonne range. Reduced demand from infrastructure players who have slowed down construction; and slowing exports are seen as some of the reasons for this revision.

“Steel prices are down by at ₹3,500 per tonne or a $50 per tonne fall, averaging out across categories. Its a temporary blip that has been witnessed over the last one month,” VR Sharma, MD, Jindal Steel and Power told BusinessLine.

Gradual stabilisation expected

According to him, a gradual stabilisation of prices is expected over the next few months, if energy prices and other input costs remain at current levels. The Russian invasion of Ukraine, saw a shoot up in price of brent crude (Russia being a major exporter) and it is now anticipated to be at $100 per barrel for the year; while European natural gas prices have almost doubled.

“Demand slowdown due to energy inflation and rising raw material prices are expected to stabilise in a month or so if factors like crude and energy prices remain at current levels. A major look out would also be the Chinese stimulus package offered to pull up economic conditions there,” he said.

India is expecting a 6 -8 per cent growth jn steel demand.

Demand outlook

ArcelorMittal, Europe’s largest steel producer, and with a global footprint including in India and the US, said demand for steel—a key barometer for global economic growth—is expected to see a slight contraction.

“Market conditions are very strong, although we are now anticipating apparent steel consumption to contract slightly this year compared with 2021,” Chief Executive Officer Aditya Mittal said in the statement. “Nevertheless, it is clear that the longer-term fundamental outlook for steel is positive,” he added.

Trade sources say, steel consumption in Europe is expected to decline 2–4 per cent in 2022 due to negative impact of rising inflation. Ukraine will see a 10 per cent slump during the year; and could turn a steel importer as it comes out of the war.

China’s full year recovery is still uncertain as the country continues to grapple with Covid-led lockdown, a real estate sector crisis and port congestion leading to continued supply chain disruptions.

Published on May 17, 2022
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