The decline of raw material prices since July will support Indian mills’ profits, but at the moment there are no other bright spots as demand in the local market is expected to remain subdued for another one to two months, market sources have said.
In August, Australian hard coking coal prices for India fell 15 percent year on year and were 23 percent lower as compared to March, while domestic iron ore prices lost seven percent over the month, Indian rating agency Ind-Ra said in its report on September 30. With raw materials playing catch-up, the margins of Indian mills are likely to improve in the second half of the financial year.
“Domestic crude steel production declined 3.7 percent month on month in August,” the agency said. And some further cuts are possible if steel prices in the local market keep following the downtrend, sources said. Ind-Ra has cut the domestic crude steel production outlook for the current year to four percent from last year’s 7.5 percent.
