Steel prices in the country may be on a rising trend as iron ore prices in the global market have risen to high levels close to 10-year highs.
The Mining.com website, citing Fastmarkets MB, said the 62 percent stage of fines for iron shipped to North China traded at $ 175.05 a tonne and cargo on Thursday.
Rates were nearly five percent higher compared to the February 17 trade.
The sharp rise in prices has been attributed to China’s return to the global market after the new lunar year.
Iron ore with 63.5 percent color content, which is ruling at $ 169.50 has, gained nearly seven percent since the beginning of the year; while the mineral with 62 percent of iron content has increased 5.61 percent.
The benefits of iron ore have resulted in steel prices rising more than four percent in China, the main producer of the commodity.
According to the Trade Economics website, the future of hot-rolled steel (HR) in China has reached a two-month high of 4,402 yuan (49,381) a ton in hopes of renewed demand after Chinese New Year.
Indian steel prices
The rise in global iron ore prices comes after a correction in Indian steel prices.
Steel prices had risen from 32,000 per tonne to 55,000 between June and December. After that, there was a correction, said an executive with a leading steel firm. He spoke on condition of anonymity.
Indian steel prices rose 55 per cent between June and December last year. This prompted Minister of Road Transport and Highways Nitin Gadkari to write to Prime Minister Narendra Modi expressing concern about rising steel prices.
His main concern was that steel prices had quadrupled during the October-December quarter and this could result in increased infrastructure project costs.
Union Finance Minister Nirmala Sitharaman intervened to assist steel users and MSMEs (micro, small and medium-sized enterprises) in the Budget presented to Parliament on 1 February.
We are uniformly reducing customs duties to 7.5 percent on semi-flat, long and non-alloy steel, alloy and stainless steel products. To give relief to metal recyclers, mainly MSMEs, I am exempting the obligation for steel scrap for a period until March 31, 2022, she said in her proposal.
Furthermore, the Center abolished anti-dumping and countervailing obligations for certain steel products by September 30, 2021.
Indeed, there has been a 20 percent correction in steel prices. Prices have been adjusted above since then and now the total correction stands at 15 per cent, the executive said, adding that prices were still considered high.
Currently, Indian HR steel prices are ruling around 47,800-48,000 a ton.
An industry official, who did not want to be identified, said the steel price move was arrested after a nuance and scream arose last year.
But iron ore and coal are the two main raw materials for the steel sectors. There will be an impact of rising Indian steel prices, the official said.
He said the July-September and October-December quarters were good for steel companies as supply and demand matched. Demand from the infrastructure sector was good.
Last year, steel prices rose by manufacturers from June largely after demand regained 90 percent of pre-Covid levels.
During the nationwide blockade, especially between March and June, capacity utilization in the steel sector was 25 per cent, putting pressure on companies to seek a way out through price increases.
In addition, the supply of iron ore, the main raw material for steel firms, was tightly closed as small mines were closed during the Covid-19 blockade.
The official said steel firms would have to enter into long-term contracts to buy iron ore instead of seeking to buy from the country. Those who have entered into long-term contracts have not expressed any concerns. You enter into a contract and then if spot market prices are low, buy from it too, he said.
There could be at least a marginal impact on steel after rising iron ore prices, he said.
The steel firm executive said prices could ease over the next two months while additional liquidity in the market thrown through various stimulus schemes by many nations could be absorbed.
Once excess liquidity is removed, prices will find their real value, he said.
However, the industry official said these were essentially market sentiments and the industry should be doing well.
The current rise in iron prices comes after a rate softening earlier this month. At the end of last month, prices gained after data showed that China, which accounts for about 70 percent of global imports, bought 1.17 billion tonnes of ore in 2020, a three-year record.
Globally, iron ore prices eased after December peaks as Chinese authorities said the steel industry should cut its crude steel production this year as part of low-carbon initiatives under the 14th five-year economic plan. country.
Last year, iron ore prices rose 20 percent in line with steel production and China’s record supply after some were affected by Covid-19.
Australia, which is the main source of iron ore in Chinas, expects Chinese demand to remain strong, but shipments may fall marginally during the current marketing year (August 2020-July 2021).
According to the World Steel Organization, China accounted for 56.5 percent of global steel production last year with total world production falling 0.9 percent to 1.86 billion tons. China production, however, increased to 1.05 billion tonnes from 1.01 billion tonnes during the period.
According to Australias ABARE commodity research unit, iron ore prices are likely to drop to $ 80 per tonne by the end of the year and further to $ 75 in 2022.
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