Expect steel prices to remain firm in 2018-19 as demand rises: CARE Ratings

18th june 2018

Steel prices are expected to be firm in the current fiscal year as rising demand from user industries is expected to fuel a growth of 6%-8% in the steel industry, CARE Ratings said in a research note.

Prices that averaged 18%-21% higher in 2017 may moderate around monsoon with infrastructure and construction activities slowing down during those months. Raw material price hike that lent to buoyancy of steel prices last year is not expected to exert much pressure on prices this year, the ratings agency said.

Domestic prices however, could get impacted by the demand supply situation in China where steel demand is expected to be flat but with some production cuts also being seen.

Major drivers of demand for steel are going to be construction and infrastructure, engineering and fabrication and automotive. Construction had made up for 62% of the total consumption of finished steel in 2015-16 and with a 21% increase in government’s infrastructure allocation in 2018-19 to Rs 5.97 lakh crore, the push by the government is likely to pull the industry forward.

Automotive sector that is a major consumer of flat steel produced by the industry is also seeing robust growth. While the two and three wheelers industry is expected to rise by 17% to 19%, commercial vehicles growth is expected to come around 18%-20% with personal vehicles poised to clock sales growth of 8%-10%.

Source: THE ECONOMIC TIMES