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Long products’ prices on backfoot

Long products’ prices on backfoot

JUNE 2021

Domestic steel demand is sluggish, encouraging mills to export. Construction activities in India are mostly stalled at present because of the lockdown across states. A sizeable portion of construction labour has also returned home. With the approaching monsoon, construction work level will remain low.

Therefore, demand for longs will also stay subdued over Jun-Sept’21.With the government order lifting restrictions on rebar supplies by secondary mills for government projects, the price dynamics have altered slightly.

As per the notification, the induction mills can supply to projects, provided they conform to mandatory BIS standards as per successive Steel Quality Control Orders.

But, in aspin-off, larger mills have not been able to increase their prices too much in order to stay in competition with the IFs. On the other hand, globally, demand for flats is high with lockdowns having eased across Europe.

The emphasis is on construction to kick-start economies. Demand in the West for automobiles is high with an accent on personal vehicles IN countries that once encouraged public transport. Both factors are fuelling import demand for HRCs and CRCs.

There is a gap of 15-20% between the domestic and overseas prices despite asharp fall in Chinese export offers on the back of volatile futures. To reduce the gap with export prices, Indian mills are mulling further price hikes in HRCs and CRCs byaround INR 2,000-3,000/tonne ($27-41/t).

In May’21 alone, a few major steel mills lifted prices twice. With further hikes expected in HRC prices, the spread between rebars may only widen further. Mills may not have too much of bandwidth to raise domestic longs prices with the monsoons round the corner even if lockdowns ease across states.