Already down by 26% in the current fiscal so far, steel prices are likely to remain under pressure over the near term in line with the sharp price fall in the international market, rating agency ICRA said on Friday.
The price fall in the international market is mainly because of the subdued demand, particularly from China which accounted for 52% of global steel demand. Russia-Ukraine war and policy rate hikes by Central banks are also impacting demand across the world. A recovery is also not in sight in the near-term.
“India is the only bright spot in the pack for now, with our crude steel production growing by a healthy rate of 8.9% in April-July of the current fiscal. The Central and state government’s combined capex spends is budgeted to increase by over 22% in the current fiscal, and we therefore expect domestic steel demand to grow at a healthy rate of 7-8% in FY23, making India one of the fastest growing large steel markets globally this year,” Jayanta Roy, Senior vice-President & Group Head, Corporate Sector Ratings, ICRA.
Also read: India proposes retaliatory duties on UK imports for curbs on steel products
However, while domestic steel demand growth remained strong at 10.6% in April-July of the current fiscal, domestic spot hot rolled coil (HRC) prices corrected by a steep 26% in FY23 so far, reaching Rs 56,700/tonne in end-August 2022, levels last seen in March 2021.
“This has largely been influenced by the 30-45% correction in international steel prices in the current fiscal. We expect domestic steel prices to remain under pressure over the near term, since domestic steel prices cannot be insulated from the trends emerging in global steel markets,” Roy said.