Steel prices dip by Rs 300 on low demand

Steel prices declined by Rs 300 across all sections in Mandi Gobindgarh, the benchmark steel market in the country, as demand - especially from the construction industry - that was expected to come in before Diwali has not appeared to be there even after one week of the festival.

However, industry watchers feel that the sector would start activities by the last part of the current month.

With the current price fall, steel ingot arc/industrial furnaces round quality (21x25) is quoted at Rs 19,550 per tonne and structural quality (28x30) at Rs 19,400 per tonne.

Plate 5-10 mm is sold at Rs 28,100 per tonne, HR coils at Rs 27,800 per tonne, HR sheets (8x12 g) at Rs 27,500 per tonne, CR coils (16-20 g) at Rs 33,000, CR sheets (black) at Rs 33,000 and GP coils at Rs 35,000 per tonne. GP sheets, GC sheets and concast-SAIL DSP billets are sold at Rs 35,000, Rs 35,000 and Rs 20,000 per tonne, respectively.

The price drop assumes significance as it has, in fact, been a move against the projection of traders and analysts.

"This year, the construction activities could not start on time bogged down by natural calamities like floods in the south and earthquakes in Pakistan. The construction activities, expected to start only after November 15, would drag steel demand," said Anil Suraj, editor, Steel Town weekly, and who runs steel mills in Chandigarh.

"Traders were expecting some demand before Diwali, especially for structural steel. But, the real scenario has turned out to be different, mainly due to cheap imports," he said.

In international markets, steel prices are declining uninterruptedly for the last two months because of excess supply.

"As Indian markets are closely linked with international steel markets, the price movement would certainly have an impact on each other," Suraj said, adding that "looking at the falling international steel prices, main domestic steel producers slashed prices by 5-10 per cent in November.

Mandi Gobindgarh has not yet responded to the main producers in equal proportion, but the market is bound to feel some impact.

"We are hopeful that steel price would recover its lost glory by the end of the current month and even go further. Traders are talking of steel price going up by Rs 500 per tonne by the month-end and by Rs 1,500 per tonne by the year-end, as the government would release funds for infrastructure for the fourth quarter and the entire planned projects for the current year have to be completed. So, like past years, the infrastructure development will see its full pace in this quarter to compensate for the gap," Suraj said.

In the Pubjab and Chandigarh regions, main steel producers have cut production by 5-10 per cent immediately, thinking to review the situation after one month once demand is back.