Decision to declare corona virus as a disaster by the state governments, including Uttar Pradesh, Odisha, Karnataka and Haryana among others has severely impacted the overall activity in physical markets where prices were down INR 400-600 per tonne in the absence of enquiries from steel companies.

Demand for steel weakens due to lack of economic viability in the wake of relatively stronger raw material prices vis-a-vis sharp fall in finished product prices. Extending the declines, export prices of Chinese, Indian and Korean steel products were reported down by USD 10-30 per tonne. In comparison, fall in input prices was much lower, hitting the profitability of steel product manufacturers.

ICEX steel futures on March 13 hit lower circuit of 6% in morning trade on contagion impact from heavy sell-off in equities across the globe that led to unwinding of long positions.  However, the April contract recouped most of the losses on short covering later in the session.

Lock downs and reports of rapid rise in new coronavirus cases in Italy and USA outweighed improving situation in China leading to fears of demand destruction for ferrous and non-ferrous metals.

Akshay Agarwal, MD, Acumen Capital said Steel futures, traded on ICEX, fell sharply to INR 28,880, down over 2%. Steel prices crashed sharply in response to the virus spread and slowing global economy. We continue to maintain a bearish view and expect prices to decline to INR 26,000 in the near future.

Naresh Khandelwal, MD at Rajdhani Iron Product Pvt Ltd said, “the COVID-19 scare has spread in the market due to which there are less economic activities. The widespread panic has led to the slowdown in the market. Consequently, the steel prices showed a 2% dip. The steel mills and the traders are looking for the right opportunity.”

Vandana Bharti, Assistance VP, SMC Global Securities, said steel long April ICEX was trading around INR 28,940, down by INR 610 and -2.06% currently. The intraday trend is negative and expects selling pressure to go up to INR 28,800/28,650 for the day.