Steel Mint, a market analysis company, reports that prices of local standard hot-rolled coil (HRC) steel at the wholesalers’ side have decreased by about 8%, or $5,500, at about Rs 63,800 per ton, since May 18.
Steel prices in the regional market, have dropped by about a tenth in the two weeks since the center imposed extravagant export levies, a trend backed up by lower seasonal demand.
Arcelor Mittal Nippon Steel India’s chief marketing officer, Ranjan Dhar, said, “Prices have been adjusted globally.”
In April, prices are at their peak.
Steel prices have decreased to Rs 64,000–65,000 per ton, down from Rs 71,000 last month, as a full 15% charge on export operations is expected. In April, prices were Rs 76,000 per ton. Surprisingly, the congestion occurs amid a projection of low demand as the southwest rains begin to decrease infrastructure activity later this month.
Dhar stated, “Prices have been reduced in the United States, the United Kingdom, and China; consequently, there are changes in India.”
“We fully understand and appreciate the government’s inflation concerns, and we expect that with this change, which has already occurred, these issues will be addressed. Falling global coal prices and the US Federal Reserve’s withdrawal of renewal are among the reasons for the downturn,” he stated.
“Manufacturers have also taken initiatives to minimize the impact of high steel prices on service users, such as fixed-price contracts for infrastructure projects and MSME pricing support, “Dhar added.
HRC steel reached about Rs 78,800 per ton in the first week of April, according to Kalpesh Padhiar, a prominent research collaborator at Steel Mint, and has since dropped to Rs 2,000-3,000 each week. He believes that the pace of falling steel prices has increased since the imposition of international tariffs.
What has led the Indian market’s prices to drop so substantially?
The government has reduced import duties on items used by the steel industry, such as burning coal and Ferro nickel. Some analysts also believe that the price reduction is due to reduced material demand during the monsoon season, as some construction projects often slow down in the middle of the summer season.
In addition, the Ministry of Minerals’ National Development Corporation (NMDC), produced 3.2 million tons of steel in May 2022. This represents a 14.3% increase over the 2.8 million tons it produced in May 2021.
NMDC production in April and May 2022, the first two months of FY23, was 6.35 million tons, up 7.4% from 5.91 million tons in the same period last year.
“Reducing the price of undeveloped items would help the sector maintain low costs,” said Himanshu Jain, VP of Sales, Marketing, and CRM at Satellite Developers.
According to Sachin Chopda, Managing Director of Pushpam Group, the reduction in steel trade tariffs will increase domestic availability of raw materials, cutting the prices of steel products used in construction and curbing price growth.
“The margin will take a beating. Margins are expected to be between Rs 13,000, and Rs 19,000 per ton in the fourth quarter. However, in Q2 and the next few months, it is expected to decline by roughly Rs 5,000-6,000 per ton,” According to a steel company official who did not want to be named,
Prices are anticipated to fall, and the outcome will be determined by events in China. In a recent analysis, Edelweiss stated, “As we approach the moment of weak demand, we can see prices increase significantly.
“If the export tax rate is maintained over the medium term, the speed of execution of some of these growth projects may be slowed, as revenue from mills may be greatly decreased.”
As a result, despite a steady first quarter of FY23, we predict margin pressure and lower demand in Q2.
