Steel prices to remain firm

Steel prices to remain firm

Recent proposal of USA to impose 25% duty on steel imports will not have much impact on world steel price, say some leading analysts. However, it will drive up steel prices in USA, thus making their products uncompetitive in global market. This may result in fall of 8-10 MT in US imports which is insignificant figure compared to 400 MT of global steel trade and a 30MT fall in China’s steel exports over the past two years. Low steel stocks and a solid demand outlook make analysts bullish on Chinese steel prices post Lunar New Year.

The USA accounts for just 2% of India’s total 2017 exports. However, there might be some immediate impact in the country as the materials originally meant for USA may be diverted to domestic market. We have wait and watch whether the government revises the minimum import prices for steel imports fixed last year.

The stated goal of the proposed policy is to raise US steel capacity utilisation from the current 73% to 80%. In other words, the proposed policy if implemented will add 8MT to domestic crude steel production. The US is the world’s largest steel importer taking 35MT from a wide-ranging group of 38 countries in 2017. Top 4 exporters to the US are Canada (5.9MT), the EU (4.8MT) Brazil (4.7MT) and South Korea (3.4MT). 

According to analyst’s firmness in global steel prices is set to continue in the coming months. Analysts expect prices to stay strong in the near term, largely driven by restocking and relatively lower inventory levels compared with previous years.

Domestic steel prices in India have been on an uptrend since Dec-17, led by a combination of modest recovery in domestic demand and buoyant export steel prices. In the first eight months of the current Financial Year steel, demand rose by just 4.2% which however, increased later on and grew by 6.5% in December-January period. Overall demand for steel during the year is expected to see a growth of 6%. Analysts see demand to grow further by 7% in next financial year.

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