Steel prices are falling, but demand in China plays a key role

Steel prices appear to be declining after some major producers slashed hot and cold rolled coil prices in the first week of March. This is the first significant decline in prices in the past nine months, and came against the backdrop of a slight lull in domestic demand in the last two weeks of February 2021.

The Mint said in February that steel prices are expected to fall as much as 10% from their January highs over the next few months due to lower costs for raw materials, iron ore and increased competition from cheaper imports as India lowers customs duties on steel. Domestic prices of HR coil, flat steel used in transportation, construction, shipbuilding and capital goods manufacturing, rose 54% year-on-year in the December quarter amid a robust recovery in domestic demand and reflecting higher global steel prices ...

In mid-February 2021, high strength alloy coil prices fell 3% but were still 40% higher than a year ago.

Flat steel prices have dropped due to increased inventories from traders who are reluctant to buy steel at high prices because they have enough stocks, a slight decrease in demand from car and pipe manufacturers and a mismatch between rolling mill price and trading price, India ratings ... and Research said. Domestic rebar prices also corrected due to lower iron ore prices and increased production by secondary steel producers.

Domestic rebar prices were KRW 48,800 per tonne in mid-February, down 9% from the previous month but 38% up from the same period last year. In addition, budget announcements of a reduction in import duty on scrap steel will stimulate secondary steelmakers to increase production. The report says it will help improve rebar supply and put pressure on steel prices. However, future price dynamics will be very closely related to the balance of supply and demand in China.