Title: Steel prices may fall to Rs 60,000/tonne by March: Crisil Report
Steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around Rs 60,000/tonne by the end of the current fiscal year, down from the Rs 76,000/tonne peak it scaled last month, says a report. Prices are still holding high because of the continuing uncertainty over supply disruptions, decarbonization measures globally, especially in China and geopolitical risks stemming from the Russia-Ukraine war, which has driven up raw material costs, Crisil said in a report on Monday.
Price corrections are likely due to the onset of monsoon next month which will pull down demand as
constructions will be on hold along with the likely lower premium realisation that domestic mills
may get from exports, the report said.
According to Koustav Mazumdar, an associate director with the agency, the onset of the weak demand season because of the monsoon and less-lucrative exports mean domestic steel prices should begin easing and ultimately move towards Rs 60,000/tonne by March 2023, down from the Rs 76,000/tonne peak it scaled in just last month, which will still be well above the pre-pandemic levels.
Flat steel prices could rise 3-5 per cent this fiscal year after surging over 50 per cent in 2021-22.
Hetal Gandhi, a director at the agency, reasoned that despite a moderation in demand in January-March, steel prices inched up owing to higher input costs and buoyant exports.
Also, domestic supply stayed tight, eliminating the differential between global landed and domestic prices, which was once nearly Rs 15,000/tonne.
On the other hand, export realization premia surged to USD75/tonne in early May. While steel mills made the best use of elevated global prices, domestic demand began to waver. Soaring construction costs, and multiple price hikes by companies in the auto, consumer appliances and durables space drove down demand in Q4FY22.
In Q1FY23, domestic demand could see an optical recovery due to low-base, but consumer sentiment remains sluggish with higher input costs leading to postponement of purchases and construction decisions......