NMDC reduces prices, steel companies roll over prices in September




With domestic demplaying catch up iron ore prices on the mend, steel companies have rolled over prices for the month.


Three of the top steel producers said that prices for the month had been rolled over. Steel demin the domestic market was impacted by the second wave of Covid-19, which reflected in a price correction in July. There was an increase in August in the global domestic markets on the back of a cut in steel supply in China now steel prices in the domestic market are being rolled over.





On the raw material side, NMDC, the country’s largest iron ore producer, has reduced prices by around Rs 1,000 a tonne, the company informed the stock exchanges on Monday.


Slide from peak


Steel prices have been coming off its highs from June levels when hot rolled coil (HRC) – a benchmark for flat steel – touched Rs 71,000 a tonne. Flat steel is typically used in automobiles domestic appliances.


A major producer said that currently HRC prices were at around Rs 67,000 a tonne.


According to CRISIL Research, long steel prices have seen a drop of 3-4 per cent (August 2021 versus June 2021) compared to 2-3 per cent in flat steel prices. Long steel is typically used in construction railways.


Domestic iron ore prices have fallen by 6 per cent in August 2021 over June 2021. With the Rs 1,000 per tonne drop in July 2021, iron ore prices would have seen a fall of 21 per cent in early September over June 2021, according to CRISIL Research.


Factors impacting prices


The recent correction in the market, seen for flat steel, has been due to three key reasons: fall in global steel prices, correcting domestic iron ore prices weak domestic demowing to second wave outbreak, auto production cuts, said Chaudhary.


But international prices are still much higher than domestic prices the gap is widening.


“Domestic hot rolled coil (HRC) prices are at a discount of Rs 7,000-8,000 a tonne to export price parity Rs 11,000-14,000 a tonne compared to import price parity. Despite this, we are focusing on ensuring stability in the market rather than going ahead with a price hike so that consumption picks up fully,” said Ranjan Dhar, chief marketing officer, ArcelorMittal Nippon Steel India (AM/NS India).


Dhar also said, “For the first time, we need to make a distinction between demconsumption. For instance, there is high demin the auto segment, but consumption is not picking up as production is impacted due to semiconductor shortage.”


Overall, there is demfrom infrastructure, construction auto segments, he said, though rural demwas impacted by lower monsoon. “It is improving month-on-month,” Dhar, however, added.


Going forward


A major steel producer said that prices could increase in October with festive sales kicking-in.


“We foresee flat steel prices to rise by 48-50 per cent in fiscal 2022 with a 26-28 per cent rise in long steel prices. Large steelmakers will see margin expansion of 550-650 bps on healthy top line growth,” said Chaudhary.


That expectation is even as global coking coal prices (a major raw material for steel) have risen by over 30-35 per cent in August 2021 over June 2021 on supply disruptions in the global market.


The cut in Chinese steel production in the second half is expected to be a major factor driving steel demprices.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information commentary on developments that are of interest to you have wider political economic implications for the country the world. Your encouragement constant feedback on how to improve our offering have only made our resolve commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed updated with credible news, authoritative views incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better more relevant content. We believe in free, fair credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism subscribe to Business Standard.

Digital Editor



Source link