Do crashing steel prices spell a rusty outlook for India?
Mint looks at the reasons for this fall, its impact on the economy and what the domestic industry should do. The benchmark per tonne price of hot rolled coil steel—used in automotive, railways, agriculture and mining industries—in Mumbai has fallen to ₹50,900 this month, the lowest since September 2020 when prices were at ₹49,200 per tonne. The current price is nearly 33% less than the peak of ₹76,000 per tonne of April 2022.
Similarly, prices of cold rolled steel—used in construction and home appliances, has declined to ₹58,200 per tonne—down 32% from the peak of ₹86,300 of April 2022. As a cyclical industry, pricing crests and troughs are normal, but prices have now fallen for three consecutive months. Oversupply in global markets due to tepid demand has resulted in an increase in steel imports by India combined with a fall in exports.
This created a glut in the domestic market, putting prices under pressure. In 2023-24, steel imports surged 38% at 8.3 million tonnes (mt) outpacing exports which grew 11.5% at 7.5mt making India a net importer for the first time since 2018-19. The trend has worsened in the current fiscal year.
A major reason for the fall in global steel prices is overcapacity in China due to weak macroeconomic conditions especially real estate and an overall tepid outlook for growth for the global economy. China is the world’s largest producer of steel, accounting for more than 30% of imports in India in Q1 of this fiscal year, up from 28.5% on-year. India’s consumption growth—steel demand expected to grow 8.2% in 2024 and 2025—makes it an easy target to divert any excess capacity.
Read more on livemint.com
