Business Standard

Hot rolled steel may hit $800 a tonne next year

Image

Ishita Ayan Dutt Kolkata
World Steel Dynamics (WSD), the world's leading steel information service, is expecting hot rolled (HR) steel prices to increase to $700-$800 per tonne through 2008 as against an earlier estimate of $550 per tonne this July.
 
The $700-$800 range is way above the alloy's prior peak of $625 in export prices (September 2004).
 
WSD's expectations are based on the fact that the steel industry is in a cost-push environment in which companies are seeking to offset higher costs in 2008, including sharply higher iron ore, coking coal, steel scrap prices, increased freight rates and higher costs in US dollar terms forthose countries whose currency is firm versus the dollar.
 
The HR steel price band is currently widely varying. Russian mills are delivering to western Europe at $650 a tonne, which WSD believes is already a steel shortage price.
 
Ukrainian mills, at the lower end of the spectrum, are, however, paying around $545 a tonne to the Far East.
 
By early 2008, the prices are expected to range between $700-$800 a tonne, clearly an increase of $100 to $150 a tonne.
 
However, WSD thinks the hot rolled price band beyond the spring of 2008 could be problematic as, by then, if steel prices are higher, then the industry could respond by paring inventories.
 
Industry sources said, domestic steel producers, which would be reviewing prices shortly, could take a cue from WSD's forecast.
 
More so, India is likely to become a net importer of steel for the first time this year.
 
Moosa Raza, president, Indian Steel Alliance (ISA), a major association of Indian steel producers, said,"As of now, India's exports and imports were of the same quantity at four million tonnes but by March 2008, the scenario is likely to change."
 
According to Raza's estimates, net imports could be in the range of 0.5 million tonne to one million tonne.
 
India's steel production is currently at 50 million tonnes and likely to increase to 55 million tonnes by year-end. Consumption would also be around the same level.
 
The shortage of steel in India is likely to persist till 2012. According to estimates, the industry would add another 36 million tonnes by 2011-12 through brownfield expansion. "The shortage could ease after 2012," Raza added.

 
 

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Oct 30 2007 | 12:00 AM IST

Explore News