Domestic steel prices likely to go up again in November by Rs1000/ton

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01 November 2016

Indian steel prices in the domestic circuit could go up in November due to the hike in coking coal and iron ore prices. Vital regional centers for trade in Ludhiana, Raipur and Durgapur did not witness major price rise pre-Diwali and are expected to release their new price list in early November. Slow or little growth did not permit the price hike at these markets.

Guiding factors for likely steel price hike include iron ore at nearly $63-64 per tonne globally and domestic price hike by Rs 200 per tonne. Major global miners are talking about transactions near $64.5 per tonne in early November. NMDC is active in the export market with its commitments though constant and regular supply is going to domestic consumers.

Exports of iron ore are expected to rise in this quarter because Goa is open and Odisha private miners are eyeing opportunities with expanding gap between lower and higher grades. Pellet producers are again active in the market but no firm transactions heard.

Coking coal traded at $225-230 per tonne while met coke entering India at almost $260-265 per tonne mark. Coking coal import into India is slated to rise in the ongoing fiscal on the back of higher demand. The rise in country’s coking coal would be as a result of commissioning of additional capacities of 3.7 MT (million tonnes) and 3 MT in JSW Steel Ltd and Tata Steel Ltd respectively for first quarter of financial year, 2017 and the substitution of steel imports by increased production. The increase in demand for coking coal when the global prices are sharply rising will burden the domestic steel industry.

The anti-dumping duty imposed on met coke as heard from media sources at about $25 per tonne will also be a burden for the domestic steel industry in November.

Only downside for the steel price hike will be the slow growth in demand within the country which is being overpowered by the substituted demand from imports post imposition of protection measures. Absence of growth drivers for domestic steel is a difficult proposition for the steel industry as costs are going up but sales are not rising on a similar level. The solution being adopted is a tiny increase in the end-price which might reflect in early November.