Ind-Ra: Higher Indian domestic steel use and rising prices may lead to government intervention

Monday, 11 January 2021 14:16:10 (GMT+3)   |   Kolkata

The rise in Indian domestic steel consumption has led to higher prices, which may invite government intervention to check prices, India Ratings and Research (Ind-Ra) has said in a steel sector monitoring report issued on Monday, January 11.

According to Ind-Ra, the current supply shortage amid improving demand is leading to higher hot rolled coil prices. With high steel prices making operations less viable and thus less profitable, end-use industries may defer consumption slightly and this could affect the increase rate of steel prices. While steel mills are pushing for a further increase in prices, there could be a possible government intervention since the cost of infrastructure projects is up by 20-25 percent over pre-Covid levels. Furthermore, automotive original equipment manufacturers and vendors are pushing for government intervention to check rising prices.

Indian domestic steel consumption in November last year totaled 8.93 million mt, up 7.8 percent month on month, but down two percent on year-on-year basis, the Ind-Ra report said.

Regarding exports, the country’s steel exports sharply declined in November, falling by 46 percent month on month to 590,000 mt due to improved domestic demand, resulting in better domestic prices, while imports during the month remained low at 350,000 mt. Ind-Ra said it expects exports to remain low over the remaining second half of the financial year 2020-21 due to strong domestic demand and strong realizations, in addition to lower imports by China due to the increase in its own steel supply.

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