The Indian government’s recent announcement of the infusion of Rs 100 lakh crore for the development of the country’s infrastructure over the next five years is certainly going to provide positive momentum to the steel demand in the country. The easing of the US-China trade issues has provided upward buoyancy to the steel prices with prices getting hiked by 10 percent in the last few days. This was the third successive price hike in the last three months and took the price hike to Rs 2500 per tonne.
Presently the increased steel demand has helped the prices to shoot up. With the price of steel being lower than China, the import threats have been cut down. Steel analysts believe that new investment, especially in the railways and power, is going to further trigger steel demand. The price increases are supported by dealer restocking due to the overall improvement in demand.
The last year was gruesome for the steel industries with prices falling by an average of 13% YoY with prices of Hot rolled coil falling from Rs 44,000 on Dec 18 to Rs 35,800 on Dec 19. Globally the steel industries witnessed a sharp fall in price. The domestic industries were forced to reduce production owing to slow economic growth and weak steel consumption and relied mostly on exports.
The government recently unveiled Rs 102 lakh crore National Infrastructure Pipeline (NIP) project with projects spreading across 8 states over a span of five years. Fresh investment in power, railways, and water along with renewed interest in the automotive sector can uptick steel demand with consumption growth estimated to be around 7 percent for this fiscal year, which gives the impression that the last quarter of FY 2020 will end on a positive note.
