Steel Prices May Fall To Rs 60,000 Per Tonne By March: Report

Flat metal costs may rise 3-5 per cent this fiscal yr after surging over 50 per cent in 2021-22.

Steel costs, which have been on a tune for the previous two years, are lastly set to right on weak seasonality, and will commerce at round Rs 60,000/tonne by the tip of the present fiscal yr, down from the Rs 76,000/tonne peak it scaled final month, says a report.

Prices are nonetheless holding excessive due to the persevering with uncertainty over provide disruptions, decarbonization measures globally, particularly in China and geopolitical dangers stemming from the Russia-Ukraine struggle, which has pushed up uncooked materials prices, Crisil stated in a report on Monday.

Price corrections are seemingly because of the onset of monsoon subsequent month which is able to pull down demand as constructions shall be on maintain together with the seemingly decrease premium realisation that home mills might get from exports, the report stated.

According to Koustav Mazumdar, an affiliate director with the company, the onset of the weak demand season due to the monsoon and less-lucrative exports imply home metal costs ought to start easing and finally transfer in direction of Rs 60,000/tonne by March 2023, down from the Rs 76,000/tonne peak it scaled in simply final month, which is able to nonetheless be effectively above the pre-pandemic ranges.

Flat metal costs may rise 3-5 per cent this fiscal yr after surging over 50 per cent in 2021-22. Hetal Gandhi, a director on the company, reasoned that regardless of a moderation in demand in January-March, metal costs inched up owing to greater enter prices and buoyant exports.

Also, home provide stayed tight, eliminating the differential between world landed and home costs, which was as soon as practically Rs 15,000/tonne.

On the opposite hand, export realization premia surged to $75/tonne in early May. While metal mills made the most effective use of elevated world costs, home demand started to waver. Soaring development prices, and a number of worth hikes by firms within the auto, shopper home equipment and durables area drove down demand in Q4FY22.

In Q1FY23, home demand may see an optical restoration on account of low-base, however shopper sentiment stays sluggish with greater enter prices resulting in postponement of purchases and development choices.

Similarly, elevated costs and the resultant inflationary strain impacted sentiment throughout the globe, finally resulting in a worth correction. Since April, hot-rolled coil costs declined over 25 per cent in Europe and the US to $1,150-1,200/tonne from a peak of $1,600 in mid-March.

While home exports to those markets will stay excessive in Q1, retreating costs will slim the arbitrage for home mills. To sum up, exports will stay vary certain at 13-14 million tonne this fiscal on the again of revised quota to Europe and provide constraints in Southeast Asia.

However, the company doesn't see a free fall as a myriad of uncertainties will restrict a freefall in home costs, which although are exhibiting indicators of fatigue after a relentless rally over the previous two years because the monsoon season units in.

The report attributes the nonetheless agency costs to the heightened geopolitical dangers which have restricted the value corrections, which began moderating early this yr.

However, the Russian invasion of Ukraine in late February, cranked the costs up once more on supply-disruption fears. In Europe and the US, the place the affect was larger, costs crossed the $1,600/tonne-mark.

Then rising enter prices added to the ache. Prices of worldwide coking coal rose 47 per cent to $670/ tonne in three weeks from $455/tonne in late February, because of the flooding of mines amid excessive demand from international locations that historically imported from Russia.

While coking coal costs have eased from their peaks, they proceed to get assist from robust demand at $500/tonne. All this has saved home metal costs elevated. In April, they hit an all-time excessive of over Rs 76,000/tonne, which is 95 per cent over March 2020 ranges, when Covid-19 was declared a pandemic. PTI BEN ANU ANU