Despite the unabated fall in raw material costs, steel prices rebounded in the physical market with ingot prices rising 5 per cent in the last fortnight. Currently quoted at Rs 35,700 a tonne in Punjab¡¯s Mandi Gobindgarh, India¡¯s largest steel selling market yard, ingot jumped sharply from Rs 34,000 a tonne early this month on healthy resumption in post-monsoon demand.
Anil Suraj, a ferrous metal analyst in Mandi Gobindgarh, believes that the current spat of demand would support the steel prices to rise further between 10-15 per cent next month. Following suit, other varieties also jumped 5-10 per cent.
The prices of hot rolled (HR) coil and HR sheet were at Rs 44,220 a tonne and Rs 43,520 a tonne respectively while cold rolled (CR) coil and CR sheet are currently prevailing at Rs 48,400 a tonne and Rs 48,500 a tonne respectively. Similarly, billet also perked up to Rs 43,500 a tonne against Rs 41,500 a tonne a fortnight ago.
Demand for all the steel products including construction, flat and long steel was dull during rainy season between June-August which suddenly resumed in September.
Long products, like bars, plates are in high demand, and are sold with a 5-10 per cent premium to the current price of Rs 43,500 a tonne (5 - 10 mm plate). Primary producers of these products already have advance orders for four months.
Specialised steel is always in demand in India and is currently an import substitute. Hence, even government does not intervene in the price movement of such steel products. Apparently, all major primary steel producers, produce specialised long and flat products to sell at a premium constituting slightly above 10 per cent of India¡¯s total steel output of 52 million tonnes.
¡°It is difficult to say that steel prices would increase further especially in the wake of falling input costs including metallurgical coke (met coke), pig iron etc,¡± said Nitin Johri, chief financial officer of Bhushan Steel. According to N Mohapatra of KIC Metaliks, a pig iron producer, met coke prices have fallen marginally by $50 to $800 while iron ore remained rangebound at Rs 5,500 a tonne in the last one month.
Poor demand from China softened 23 per cent during the period on China¡¯s dis-interest in resuming operations on closed steel units due to weak global sentiment. Pig iron, the valued raw material for steelmaking, is currently quoted at Rs 27,000 a tonne from Rs 35,000 a tonne a month ago.
Another secondary steel producer, Suresh Kumar Bhuwalka, MD, Bhuwalka Steels Industries was quick to comment that steel prices are unlikely to go further up as scrap prices are falling globally. Steel scrap slumped $125 to $475 in a month on weak global demand.
¡°Chinese demand was expected to begin this month post-Olympic Games. But, the impact of Games is still continuing. As long as Chinese demand continues to remain under pressure, the impasse for pig iron producer would not waive,¡± said Mohapatra. To make met coke costlier, China levied 15 per cent additional duty to the existing 25 per cent export duty on met coke, a key ingredient of pig iron, which India imports.
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Raw material prices dip, but steel costlier
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Posted - 09/17/2008 : 03:11:34
