Domestic steel prices come off

Steel prices have started showing signs of weakness, with long product prices sliding by Rs 1,500-2,000 per tonne, in the secondary market.

Industry sources said prices have dropped by Rs 1,500-2,000 across long products. Channels, which were enjoying premium of Rs 400-500 per tonne in the market, were also on a downtrend.

The softening of prices is not just restricted to long products. Ingot prices have come down from Rs 23,200 per tonne on April 25 to Rs 20,800 per tonne. Sponge iron prices have moved from Rs 14,200 per tonne to Rs 11,800 per tonne, while scrap prices have come down by Rs 1,500 per tonne, during the same period. However, flat products are yet to show weakness in prices.

Industry sources cited excess capacity as the primary reason. Moreover, steel prices across the globe have also dropped dramatically across categories. International steel prices have slid by $30-$40 per tonne over the last few days.

Y Siva Sagar Rao, chairman and managing director, Rashtriya Ispat Nigam Ltd, said, the softening was in the secondary market and it was a temporary phenomenon. He expects prices to bounce back.

Steel guru, Peter Marcus, managing partner, World Steel Dynamics recently said in Kolkata, steel prices were headed downwards and would drop by $100 per tonne by the third quarter of the year.

He said, prices across the globe were showing signs of weakness and would bottomout by the third quarter, after which they would again recover. Prices of hot rolled coils in the US were hovering around $510 per tonne, which was around $720 per tonne, even 2-3 months back.

Three of the world's leading steel producers""Mittal Steel, US Steel and AK Steel""said the markets could weaken in the months to come with demand cooling off in key markets and a rise in iron ore prices.

Mittal Steel, the world's largest steel producer, in fact said it would cut production in the current quarter (April-June).

Industry sources said the global weakness would have repercussions in the domestic market. The frenetic buying of long products, which sent prices spiralling upwards has been arrested owing to some slowdown in the construction sector.