Steel prices to remain firm on India's pre-election spending binge
Domestic steel prices are expected to remain at Rs 59,000 per tonne (flat steel) and Rs 56,000 per tonne (long steel) on pre-election spending, during the current financial year, a note from CRISIL Market Intelligence and Analytics said. According to the note, the higher prices will remain despite a slowing global economy.
This commentary comes a day after India imposed anti dumping duty on flat based steel wheels from China.
Smoldering domestic demand, rising coking coal prices and production related dynamics in China, the world’s largest steel maker, are also likely to prevent the slide of prices in India.
«Domestic demand is poised to grow in double digits for the third consecutive year, buoyed by pre-election spending this fiscal.
In the first five months, it had already risen 13%,» the CRISIL note said.
Further, frontloading of central government capital expenditure (capex) could imply demand tapers in the second half. «Over the entire fiscal, we expect demand to grow 10-12% on-year.
This would come on top of 11.4% and 13.4% growth, respectively, in fiscals 2022 and 2023,» the note added.
According to Koustav Mazumdar, Associate Director- Research, CRISIL Market Intelligence and Analytics, «Private capex revival and steady auto demand will further drive growth. All this, amid fluctuating global raw material prices, will keep flat steel prices ~50% higher than pre-pandemic levels on average this fiscal.”
