Construction lull pulls down steel prices

Rates have fallen by Rs 2,000 a tonne in the last one month

Steel prices have slumped by Rs 2,000 a tonne in the last one month following a lull in the construction industry. The price of hot-rolled coil slid to Rs 25,500 a tonne from Rs 27,500 a month earlier.

Galvanised plain sheets (GP sheets) and galvanised corrugated sheets (GC sheets) also declined by Rs 2,000 to Rs 33,000 a tonne compared with Rs 35,000 a tonne one month earlier.

Currently, the steel industry is facing an oversupply, which players feel is a short-term phenomenon. Also construction activities had slowed down over the last four months because of flood in some areas followed by the festival season.

A local trader said, "We were expecting supplies to infrastructure sector to gather momentum after Diwali, but this year it was delayed by about one month."

"The current scenario is expected to continue at least for the next two to three months," said Dhanpat Gupta, director, Soorajmull Baijnath Ltd.

Analysts, however, expect the projected domestic consumption for the entire year to stay on course. "Demand would start coming in from December and would continue till March 2006," said an analyst.

Other products such as plates, hot-rolled sheets, cold-rolled coil, CR sheets and galvanised plain coil posted a loss of Rs 1,000 a tonne to Rs 27,000 a tonne, Rs 26,500 a tonne, and Rs 32,000 a tonne for the other three product categories respectively.

Flat steel (Mumbai) on the Multi Commodity Exchange of India lost Rs 1,000 to Rs 20,500 a tonne, while longs (Gobindgarh) managed to limit its loss to Rs 250 only at Rs 19,100 a tonne. Longs (Bhavnagar) on MCX, in contrast, perked up on demand from local consumers to Rs 19,190 a tonne.