Domestic steel prices are expected to increase for the third consecutive month in January owing to global hike in steel prices and revival in domestic steel demand.
Although the steel prices have gone up in the last consecutive two months the demand has been strong in both automobile and infrastructure sectors because of restocking by dealers. Thus steel companies have intimated that Hot-rolled coil (HRC) prices will go up by Rs 700-1,000 a tonne in January.
The domestic steel prices were hiked by Rs 500 – Rs 750 and Rs 750 – Rs 1000 in consecutive months of November and December respectively. Steel prices fell substantially from April and touched a low of Rs 32,500 a tonne in September from the peak of Rs 44,000 a tonne late last year.
The increase in global steel prices by $60 to $70 is certainly going to have an impact on the domestic price as well. Thus the steel companies have hiked prices by Rs 1,000- Rs 2,000 per tonne.
At a time when the raw material price is falling and the market is witnessing an uptake in demand, the rise in steel prices will add to the companies profit margin. The coking coal prices have fallen by $60 a tonne to $130 while the iron ore prices dropped to $90 a tonne from $120 a tonne. Therefore, the domestic steel industries can expect a better profit for the last quarter of FY20 as compared to the third one.
The domestic steel demand remained weak in most parts of this fiscal due to the slowing economy and plummeting auto sales and the steel companies have no other option rather than relying on exports. India was a net steel exporter for the first eight months of this fiscal year. The country’s net steel imports grew by 5.3 percent while exports grew by 33 percent as the steel prices in the domestic markets were trading at a discount of $16 a tonne to international prices during this period.
