Metallurgical industry in anticipation of an increase in demand

Steel prices, especially hot rolled steel (HRC), fell to three-month lows amid slowing demand. Analysts say this will affect the bottom line of major steel companies, including Tata Steel and JSW, as gross margins of large companies have plummeted over the past 19 weeks.

Companies are hoping for a resurgence in demand, which is still elusive. A source at Essar Steel said: “Sales are driven by giving discounts to customers. But sales are low and not in our (steelmakers') hands. Steelmakers will end up hitting margins. Steel exports increased by 30-40% compared to the same period last year. Thus, the sales volume is maintained. "

Domestic HRC prices in India have declined on average by about 27 percent year on year and 17.3 percent this fiscal year.

Steel export is one option for increasing volumes, as domestic prices are reduced compared to land costs. “We do not see the possibility of increasing imports. At current levels, domestic steel prices are down 4 percent compared to land prices imported from South Korea and Japan. Large domestic steel producers are entering export markets as domestic demand remains weak.

An industry watcher said steel demand will rebound as the auto sector unfolds.