Indian domestic steel prices are showing signs of ‘fatigue’ after a relentless rally over the past two years, following supply disruptions, decarbonization measures globally, especially in China, and the cost push from the Russian invasion of Ukraine, a steel sector report of rating agency Crisil said.
The report said that, while prices had defied correction predictions until now largely owing to uncertainties over the impact of the war in Ukraine, moderation of prices is on the cards with the onset of the monsoon season in India.
Indian mills made the best use of elevated global prices, domestic demand began to waver, and soaring construction costs and multiple price hikes by producers of automobiles, consumer appliances and durables drove down demand in the last quarter of 2021-22 and in the first quarter of the current fiscal year, and consumer sentiments remain sluggish with high input costs leading to postponement of raw material purchases and construction decisions, Crisil’s note said.
Similarly, elevated prices and resultant inflationary pressures have impacted sentiments across world markets, eventually leading to price corrections. Since April, hot rolled coil (HRC) prices have declined 25 percent in Europe and by around $1,200-1,500/mt in the US, Crisil said.
Crisil went on to say that, while exports to these markets from India will remain high in the first quarter of 2022-23, retreating prices will narrow the margins of domestic mills, but in the end exports out of India will remain in the range of 13-14 million mt through the year on the basis of the revised EU quota and supply constraints from Southeast Asia.