JOIN USSteel prices likely to see a correction soon: JSW Steel
Steel prices, which have nearly doubled in the last year to rule at Rs 70,000 per tonne, are likely to see some correction in the next few days.
The drop in prices is likely as the consumption in the domestic market has been impacted by lockdowns. The domestic market will be influenced by a recent price correction in China. The prices in China have fallen by $30 per tonne to $1,014 per tonne.
"I don't expect steel prices to go up further. There is no fundamental reason for prices to go up further. If international prices correct, domestic prices will also correct as has happened in China. There will be some correction in the coming days," Seshagiri Rao, Joint Managing Director and Group CFO, JSW Steel said.
However, he said it would be difficult to estimate the extent of price correction.
In an interview with DH, Rao said there has been too much rise in the prices of steel between March and now largely driven by speculation. There will be a correction in the global markets and domestic markets will follow, he said.
He, however, said the prices can be brought down further provided the raw material prices like iron ore are contained, Rao said.
Over the past year, NMDC has raised iron ore prices by 156% to Rs 6,560 per tonne, while the private miners have increased much more. “Last year, we have seen export of 46 million tonnes of iron ore compared to 24 MT in the previous year. While the production of iron ore came down by 44 MT to 202 MT from 246 MT in the previous year. As a result, the steel mills faced a shortage of 67 MT, which led to a rise in the price of the raw material,” Rao said.
Unless the prices of raw materials like iron ore comes down, there cannot be a reduction in steel prices, he said.
He demanded the government to ban the export of iron ore or increase the export duty on iron ore to discourage export of raw materials and enhance value addition in the country.
“The government should increase the export duty on iron ore to 50% from the present 30% on select grades so as to discourage exports and ensure higher supplies to the domestic steel mills,” Rao said.
The demand for steel is also very strong despite short term dip due to Covid-induced lockdowns. However, normalcy is expected from the second quarter onwards. The difference between the landed price and domestic price is about 20%. As and when the international prices come down, it will be reflected in India as well, he added.