Steel prices likely to go up again in April: Analysts

Intranet-tata-steel-construction-corby-CORBY-4771.jpg

Steel analysts expect a surge in hot-rolled coil (HRC) prices again, with prices expected to rise between Rs 2,000 and Rs 3,000 a tonne during April 2021. Strong domestic demand, rise in export price offers from Vietnam and local steel being Rs 5,000 a tonne cheaper against imported steel on landed cost are few of the reasons for this estimated price hike, according analysts from Nomura.

“After a slight dip in February 2021 domestic steel prices recovered in March 2021 and are expected to remain elevated over the coming months on the back of higher international steel and iron ore prices. It is anticipated that HRC prices are expected to go up by at least Rs 3,500-4,000 per tonne in April 2021. A Rs 4,000 per tonne hike will take domestic HRC prices to Rs 59,000-60,000 per tonne, which would be the highest level seen since 2008,” said CARE Ratings in a note.

It further noted that steel prices in the world are at an all-time high due to steep increase in the prices of iron ore as well as due to the strong growth in steel demand from China, India, USA, Europe and other emerging markets as global markets recover from a year-long slowdown with the reopening of business activities and vaccination drive.

However, most manufacturers will not be able to pass on entire rise in input cost as the economy is still not out of the Covid-19 induced slowdown, warned analysts.

“Among the worst-hit sectors will be automobiles and infrastructure sector. The construction and real estate sector accounts for almost 55-60% of total steel consumption followed by auto sector which accounts for nine percent and capital goods and consumer durables with a share of 8% and 6%, respectively,” said CARE Ratings.

Increase in prices of steel to record levels will impact automobile manufacturers in the coming months as most of them will have to increase prices of their products, twice in the last four months, to protect their operating margins, at a time when demand for vehicles has gradually been recovering. Also rise in cases of Covid-19 in important states and consequent restrictions imposed by state authorities are likely to impact customer sentiment.

Leave a Reply

Your email address will not be published. Required fields are marked *