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Indian steel market pulverized on economic woes

Steel News - Published on Sat, 28 Jul 2012

Indian steel market has striking analogy with the Chinese market during the week both undergoing a holocaust in week 30. Indian steel prices declined picked up a fortnight ago after nearly a month of dormancy.

Sudden debacle was an after effect of economic headwinds having taken a toll of the infrastructure and construction demand. Policy paralysis not withstanding even the rudimentary level demand eluded. Eventually the monsoon factor receding as the rains are sparse and delayed it was the core malaise besetting the market came to the fore.

Even though primary mills basked in the glory of 8.8% growth in steel consumption in Q1, the insidious reality of poor demand stared into the secondary sector who had ridden honky dory earlier on speculation and cost escalation . However the morose caught up with the primary sector as well at the onset of Q2 with residual infrastructural projects tapering off.

Primary mills have acted brave heart with roll over in two consecutive months but August will be nemesis with inevitable reduction. Most of the secondary mills in havens of Raipur, Mandi, Hyderabad, Bangalore, Chennai etc coming to terms by reducing TMT and pencil ingot prices by nearly INR 1000 per tonne in the last fortnight.

Flat product has entered an endless tunnel. With dormancy prevalent for the last 18 months it seems Indian flat product market has undergone a paradigm shift. Most of the Indian mills emerging as exporters leveraging weak INR and poor domestic demand augmented volumes are finding outlet in the Middle East and European market.

Global cues have remained unaltered with a sticky EU crisis and undulating US recovery keeping stock market and the metal prices on tenterhooks deepening ambiguity. Global long and flat product prices have remained subdued with minor blips. Key raw materials viz., scrap, iron ore and coke prices have been depressed taking the cue for cost push escalation in finished prices. China rearing to enhance export with un liquidated volumes in domestic market morose is unlikely to recede.

Devoid of fundamentals providence is the sole recourse and market is expectant that buying will pick up around Oct-November when construction activity picks up in India and so does consumerism. Global market is rife with a similar optimism expecting stock replenishment in Europe and Middle East. Chinese steel market is pinning hopes on unfolding of state sponsored housing and infrastructural projects.

Class20-Jul27-JulChangeChange
ILPPI93899215-174-1.9%
IFPPI90648963-101-1.1%
INDSPI92349095-139-1.5%

ILPPI - Long Product Price Index
IFPPI - Flat Product Price Index
INDSPI - Indian Steel Price Index
(www.steelprices-india.com)


Source - Strategic Research Institute

(www.steelguru.com)
Posted By : admin on Sat, 28 Jul 2012
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