WSD sees $100/t drop in steel prices by Q3

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

Marcus said prices across the globe were showing signs of weakness and would touch a bottom by the third quarter. He however said, after prices bottomed out, it would thereafter recover.

Marcus was speaking on the sidelines of the international conference on minerals-metals-manufacturing organised by the Confederation of Indian Industry.

However, T Mukherjee, deputy managing director (steel) Tata Steel said, there were contradictory views on the outlook for steel prices. He said, prices may not drop to that extent.

He said, around 60-70 per cent of Tata Steel's flat products were through long term contracts, which were recently renewed. Long products were negotiated on a project-to-project basis.

Prices of hot rolled coils were hovering around $580-$590 per tonne in the US, which was around $720-$750 per tonne even 2-3 months back. In China, prices were higher by $30-$40 per tonne.

Industry sources said, a global drop in prices was likely to have some impact on Indian steel prices.

Marcus during his presentation at the seminar said, out of 300 million tonne consumption in China, 220 million was fixed asset investment.

The primary reason for the softening of steel prices was inventories. According to SBB Global Market Outlook, there was an industry-wide perception that stock levels were too high in Europe and North America, which was causing sentiment to weaken.

"While apparent demand has been sonmewhat lower than anticipated, this is mainly due to attempts to reduce stocks through supply chain rather than any lack of end-user consumption" said SBB.

The problem was not just restricted to US and Europe. Throughout the first half of March, demand and prices were strong particularly for coils in China, Asia and the Middle East.

Buyers' sentiment only changed in second half of March as additional suppliers started to offer extra material.

The unexpected excess of availability caused concern among buyers wary of committing at prices higher than might be achievable by holding off ordering, said SBB.