Sustained increase in steel prices in August can signal revival in domestic consumption: CARE Ratings


MUMBAI: Sustenance of increase in steel prices for the month of August, supported by capacity cuts by China can signal a revival in the domestic consumption of steel if the increased prices are not rolled back, according to research.

According to reports, flat steel producers increased the price of steel by almost Rs 3,000 per tonne with effect from August 1, a move that can be owed to the expected improvement in demand as well as growth in international steel prices.

The rally in steel prices in August comes after a similar rally in July when prices for cold rolled coils (CRC) and hot rolled coils (HRC) reported a jump of Rs 929-Rs 1580 per tonne, compared to June. This price rise had come about after a gap of five months on a sequential basis. Before this, it was in the month of January that prices had increased in the range of Rs 2,250-Rs 2,350 per tonne, on a month-on-month basis.

“The prices in July 2017 are believed to have increased on account of an improvement in domestic demand and a rise in international steel prices,” CARE Ratings said in a report. “So, if the price hike which is undertaken in August, 2017 is sustained and not rolled back, then the prices will be up in a row on the sequential basis.”

The statement is bolstered by changes in steel activity in China which will eventually have a bearing on the international steel prices and prices for India.

Steel prices in China increased in June-July on a month on month basis as the Chinese government undertook cuts to rein in oversupply as well as to curb air pollution. The largest producing country in the world is also expected to cut output during winter in its aim to check air pollution, leading to a stability in prices in the near term, the report said.