New Delhi (Agency): A new report by Crisil, a global analytics company, suggests that domestic steel prices in India will likely remain stable in the upcoming months of this fiscal year. The stability is expected due to various factors such as strong demand, increases in the cost of coking coal, and production-related issues in China.
Crisil’s market intelligence and analytics report projects that the price of flat steel will hover around Rs 59,000 per tonne and long steel around Rs 56,000 per tonne. The demand for domestic steel is poised to grow in double digits for the third year in a row, boosted by pre-election spending.
Sachidanand Choubey, Manager (Research) at CRISIL Market Intelligence and Analytics, commented, “Flat steel prices should remain elevated at around Rs 59,000 per tonne, dipping only marginally by 2-4% amid better demand prospects and rising coking coal prices.”
Between April and July of this year, flat steel prices had corrected by Rs 4,500-5,000 per tonne and long steel prices by Rs 6,500-7,000 per tonne. However, the demand has grown by 13% in the first five months of the year. Crisil analysts expect overall demand to grow by 10-12%.
Infrastructure spending, which accounts for around 30% of total steel consumption in India, is also expected to support the steel market. Koustav Mazumdar, Associated Director Research at Crisil Market Intelligence and Analytics, stated, “With annual growth in infrastructure capital expenditure expected at around 25% this fiscal, domestic steel demand has great support.”
The report also notes that the central government has already used around 32% of its total budgeted capital expenditure on big-ticket infrastructure projects from April to July 2023. This is an unprecedented increase of 30% in infrastructure capital expenditure.
Rising prices of coking coal, essential for steelmaking, are another supporting factor for stable steel prices. Prices have surged by about 50% over the past year and are expected to remain elevated.
Additionally, production shifts in China, the world’s largest steel producer, could lead to a global shortage of steel, further supporting domestic prices in India.
The report finally points out that fluctuating global raw material prices and steady auto demand will contribute to keeping flat steel prices about 50% higher than pre-pandemic levels this fiscal year.
With multiple factors contributing to the expected stability in steel prices, it remains to be seen how the market will react in the upcoming months.