Steel prices in the country could be in for some upward movement after iron ore prices in the global market have surged to near 10-year highs. Mining.com website said that benchmark 62 per cent iron ore fines shipped into Northern China were traded at $175.05 a tonne cost and freight on last week. The rates were nearly five per cent higher compared to February 17 trade.
The sharp price spike has been attributed to China’s return to the global market after the lunar new year. Iron ore with 63.5 per cent ferrous content, which is ruling at $169.50 has, gained nearly seven per cent since the beginning of the year; while the 62 per cent ferrous content ore has increased 5.61 per cent.
Iron ore gains have resulted in steel prices rising over four per cent in China, the major producer of the commodity. According to Trading Economics website, hot-rolled (HR) coil steel futures in China have reached a two-month high of 4,402 yuan (Rs 49,381) a tonne on hopes of renewed demand after the Chinese New Year.
The rise in global iron ore prices come on the heels of a correction in Indian steel prices. There was a 20 per cent correction in steel prices. Prices have been adjusted higher after that and now the total correction stands at 15 per cent. Currently, Indian HR steel prices are ruling around Rs 47,800-48,000 a tonne.
Indian steel prices increased 55 per cent between June and December last year. Steel prices had increased from Rs 32,000 a tonne to Rs 55,000 a tonne between June and December. This led to Minister of Road Transport and Highways Nitin Gadkari writing to Prime Minister Narendra Modi expressing concern over the increase in steel prices.
His primary concern was that steel prices had been raised four times during October-December quarter and it could result in infrastructure project costs rising. The current spike in iron prices comes on heels after a softening of the rate earlier this month. Last year, iron ore prices rose 20 per cent in view of China’s record steel output and shortage in supplies as some were affected by Covid-19.