+
Falling demand to control soaring steel prices
Steel

Falling demand to control soaring steel prices

Skyrocketing steel prices are likely to face a headwind as demand takes a sharp hit from users due to Covid-induced restrictions.

Due to Covid-induced restrictions, the industry has suffered. When compared to March, finished steel consumption was down 23% last month, at 6.78 million tonne (mt). Steel consumption is expected to fall in the June quarter compared to the March quarter.

However, it will still be higher year on year because the country was completely shut down in the June quarter of last year. The second wave is expected to have an impact on auto and consumer durable demand, as well as delay construction and infrastructure activities.

However, strong export demand and higher international prices would allow steel producers to increase export levels, although high freight and shipping costs and container availability could be areas of concern, India Ratings said.

Domestic hot-rolled coil prices increased 3% month on month and 78% year on year in mid-May to Rs 65,250 per tonne. Similarly, domestic rebar prices rose Rs 3,000 per tonne month on month to Rs 56,000 per tonne in May. Steel prices rose as a result of increased export orders, which resulted in lower supply within the trade segment, strong global demand, and high international steel and iron ore prices.

However, domestic demand is likely to be subdued as a result of the lockdowns and increased infection rates, affecting auto and consumer durable demand, it said.

The recent drop in Chinese futures prices may have a short-term impact on India's export orders and domestic prices. Given the Chinese government's efforts to control steel prices and lower demand expectations as a result of the lockdown, domestic and international prices are likely to face headwinds, but would remain higher than pre-Covid levels, the rating agency said. In April, crude steel output was down 17% month on month at 8.3 mt due to steel companies diverting oxygen for medical purposes. On higher consumer demand, China's crude steel output increased 13% year on year in April to 98 mt. Despite the government's efforts to reduce annual output and reduce carbon emissions, output increased. In April, China's industrial output increased by 9.8 %.

Image Source


Also read: Rising steel, cement prices to impact real estate

Also read: NAREDCO seeks govt intervention to check rising prices of raw materials

Skyrocketing steel prices are likely to face a headwind as demand takes a sharp hit from users due to Covid-induced restrictions. Due to Covid-induced restrictions, the industry has suffered. When compared to March, finished steel consumption was down 23% last month, at 6.78 million tonne (mt). Steel consumption is expected to fall in the June quarter compared to the March quarter. However, it will still be higher year on year because the country was completely shut down in the June quarter of last year. The second wave is expected to have an impact on auto and consumer durable demand, as well as delay construction and infrastructure activities. However, strong export demand and higher international prices would allow steel producers to increase export levels, although high freight and shipping costs and container availability could be areas of concern, India Ratings said. Domestic hot-rolled coil prices increased 3% month on month and 78% year on year in mid-May to Rs 65,250 per tonne. Similarly, domestic rebar prices rose Rs 3,000 per tonne month on month to Rs 56,000 per tonne in May. Steel prices rose as a result of increased export orders, which resulted in lower supply within the trade segment, strong global demand, and high international steel and iron ore prices. However, domestic demand is likely to be subdued as a result of the lockdowns and increased infection rates, affecting auto and consumer durable demand, it said. The recent drop in Chinese futures prices may have a short-term impact on India's export orders and domestic prices. Given the Chinese government's efforts to control steel prices and lower demand expectations as a result of the lockdown, domestic and international prices are likely to face headwinds, but would remain higher than pre-Covid levels, the rating agency said. In April, crude steel output was down 17% month on month at 8.3 mt due to steel companies diverting oxygen for medical purposes. On higher consumer demand, China's crude steel output increased 13% year on year in April to 98 mt. Despite the government's efforts to reduce annual output and reduce carbon emissions, output increased. In April, China's industrial output increased by 9.8 %. Image SourceAlso read: Rising steel, cement prices to impact real estate Also read: NAREDCO seeks govt intervention to check rising prices of raw materials

Related Stories

Gold Stories

Next Story
Infrastructure Urban

BMW Ventures Secures Rs 249.83 Million (mn) Steel Orders

BMW Ventures Limited said it has secured two purchase orders totalling Rs 249.83 million (mn) from Lata Projects Limited for the supply of TMT steel FE-550D grade for three units of 800 megawatt (MW) capacity at the USCTPP Adani project. The orders were disclosed to the stock exchanges under Regulation 30 of the SEBI Listing Regulations and carry a contract value inclusive of all taxes.\n\nThe company stated that the orders will be executed within eight weeks from the date of the purchase orders and that the contract provides for 100 per cent advance payment with specified guarantees. The supp..

Next Story
Real Estate

Housing Sales Dip in Top Eight Cities in Q2, Pune and Bengaluru Hit Hard

Housing sales across the top eight cities fell six point one per cent year-on-year to 91,729 units in the April-June quarter from 97,674 a year earlier, PropTiger’s Real Insight Residential report showed. The moderation reflected seasonal pre-monsoon effects and heightened buyer caution amid the US-Iran conflict. New launches rose six per cent to 89,161 units. The impact was concentrated in technology-driven markets, with Pune and Bengaluru among the hardest hit. Pune recorded the steepest annual decline at 20.8 per cent, with sales falling to 12,642 units, while Ahmedabad declined 20.2 per ..

Next Story
Infrastructure Urban

India And ADB Sign US$230 Million Loan To Modernise Chennai Water

The Government of India and the Asian Development Bank (ADB) signed a US$230 million loan to modernise and expand water supply and sanitation infrastructure in Chennai. Saurabh Singh, Deputy Secretary, Department of Economic Affairs (DEA), signed on behalf of the Government of India and Mio Oka, Country Director of ADB’s India Resident Mission, signed for the lender. The engagement was guided by Baldeo Purushartha, Joint Secretary (ADB and Japan), DEA. The Chennai Climate-Resilient Water Security and Sewerage Project aims to improve access to safe and reliable water and sanitation citywide w..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code