Global Steel prices are likely to remain stable in the next few months owing to increased supply from China.
The global Steel prices might remain under pressure owing to the increased supply from the Chinese market. The country has produced Steel in bulk and also increased its supply. Chinese Steel mills have been supporting cheap export prices amid slow economic growth and overproduction. It forced other suppliers in the global market to lower their rates resulting in Steel market slowdown.
The commotion in the global market is affecting Indian steelmakers as well. Indian Steel industry is already pushing hard through the storms of depreciating INR value. The overall production of Steel from domestic players is expected to grow at an annual 6.3 per cent, aimed to reach about 104 MnT by 2017 from 78.6 MnT in 2012.
The additional output would bring in demand driven by Government’s much awaited USD 1 trillion plan on infrastructure in the 12th Five year plan (2012-2017). However the current decreasing prices can strongly affect their estimates.
On the other hand, input side issues can upset the Indian Steel Industry’s planned situations. Specifically, impulsion of ban of Iron ore mining in states like Goa and Kerala has bounded the steelmakers to rely more on expensive imports to meet their requirements.
Weakened INR supported imports for many companies on coking coal viewing its shortage in the country. Companies like JSW Steel, RINL and Essar Steel will be affected majorly with the increased cost of obtaining coking coal. SAIL’s unchanged price reflects the difficult scenario of Indian Steel industry. It has kept its prices stable since 1 Mar, 2013.
Government thus decided to impose a countervailing duty and a separate special countervailing duty over-and-above the import duty on steel. This was decided to protect the domestic Steel industry from excessive imports.
Thus in the long-run, Steel prices are increasing majorly because of China’s recently announced plans for controlling over pollution. The plan better known as “60-point action plan” will curb China’s overall steel output to 80 MnT by 2017. This action will thus help restrain global steel prices in the near future.