International steel prices on the decline

Global steel prices maybe headed for a slip over the next month.

While hot-rolled coil prices in China have already dipped by $50 per tonne and are being quoted at $500 per tonne levels, prices in south-east Asia are also witnessing a decline by around $30-$40 per tonne to stand at $520-530 per tonne.

These prices are still all-time highs. Senior industry executives said that China "" the world largest consumer of steel "" has stopped buying steel from the international market completely as has a considerable inventory build-up. Industry sources said that the softening of HRC prices has come about mainly because of the Chinese slowdown augmented by a $40-$60 decline in scrap prices. Scrap prices have come down to around $240 from close to $300 mark.

A senior industry official told Business Standard, "While European companies are still quoting HRC at the $550 - $560 levels, it is very likely that the decline in China and South East Asia will be reflected on European markets in the coming weeks."

However, prices in the US market continue to be firm at $550 per tonne of HRC. A steel analyst said, "There seems to be a kind of a rebound situation in US market, especially in the hot-rolled coil prices."

Meanwhile, steel producers have stopped supplies to China and are also waiting for prices to recover to enter into fresh export contracts. An industry official said, "Most of the domestic steel makers are not looking at the export market till prices firm up, especially in the Chinese market."

Market forces indicate that the price recovery in China should happen in May, which will strengthen the global price trend further, he added. Moreover, steel exports have been crippled due to the withdrawal of DEPB benefits by the government, effective March 27, 2004.