Strong export demand and higher international prices will enable Indian steel producers to increase overseas shipments although high freight rates and shipping costs could be areas of concern,” India Ratings (Ind-Ra) said in a steel sector report on Monday, May 31.
Ind-Ra report said that soaring steel prices in the local market may finally face a headwind with the sharp fall in demand for most user industries due to Covid-19 restrictions.
Finished steel consumption in April this year was down 23 percent to 6.78 million mt compared to March and continue to fall in the June quarter, the report said.
Domestic hot rolled coil (HRC) prices increased by three percent month on month in mid-May and by 78 percent on year-on-year basis. Steel prices increased largely because of big export orders, strong global demand, and high international prices of steel and iron ore, Ind-Ra said.
However, on a note of caution, it said that the fall in Chinese future prices last week could partially impact India’s export orders and domestic prices over the near term.
Considering the Chinese government’s efforts to check prices of steel and lower demand expectations, international prices are likely to face headwinds but to still remain higher than pre-Covid levels, the report said.