Domestic steel prices may come down by as much as Rs 1,000 a tonne this month due to sluggish demand mainly from the construction and infrastructure space.
"In July, steel prices are likely to fall by Rs 1,000 a tonne mainly due to lack of demand from infrastructure firms amid the monsoon season," Steel Secretary Atul Chaturvedi said.
Domestic steel makers are yet to announce any price changes of their products.
High cost of raw material, fall in demand and cheaper global rates are putting pressure on domestic steel prices and analysts say the trend could well hit the margins of domestic companies in the current quarter.
"The same trend is likely to be witnessed during the present quarter," Chaturvedi said.
Joint Plant Committee Chief Economist A S Firoz had earlier this week said that the July-September period will see erosion of profitability of steel companies as the gloomy demand scenario would prevent them from hiking rates amid high input cost pressure.
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He described the second quarter as "the weakest link" for the industry in the current fiscal. Steel firms have seen prices coming down by up to Rs 6,000 a tonne to around Rs 27,000-33,000 a tonne in past few months as construction work slowed down ahead of monsoon.
Anticipating a hit on their bottomline, steel makers like Tata Steel, Essar Steel and JSW Steel are looking at increasing price in some segments in the current month.
Prices of raw material -- coking coal and iron ore -- are at present ruling around 50-100 per cent high. Spot iron ore prices are ruling at around $100-115 a tonne and coking coal prices at around $185 a tonne level.