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Surging Steel Demand Reveals the Silver Lining behind the Gloomy Numbers

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by - 8/26/2020 176 Views

In several countries, steel is deemed as an essential industry. Global crude steel production is decreased by 1.4% during the first three months of 2020 compared to 2019.

 

The demand for steel production also fell sharply due to the global pandemic. But, it seems that we had enough tough time. The surging steel demand on the week-on-week basis in India shows the silver lining behind the gloomy numbers these days. It’s a great news for people waiting for a positive recovery in steel demand owing to the Y-o-y growth in steel production after the covid19 outbreak found last week.

Steel Import in India is increased from 2.66 lt in June to 2.93 lt in July, showing a 10% increase as the overall domestic demand picked up after the disruption caused by the Covid pandemic. This revival in steel demand reduced steel exports by 12 per cent to 14 lt against 16 lt logged in June. With the increasing demand for steel in the domestic market, the export figures are falling to meet the domestic steel demand.

The Rise in Steel Price

The sudden spike in demand for steel has caused the steel prices to go up by 15% in the international market. For those having good control over the product, it comes as a great news as they decide on exporting steel as much as possible to gain maximum benefits. But, when it comes to domestic manufacturers of bicycle, fastener, auto parts, sewing machines, machine tools, hardware and hand tools, they are facing scarcity and are sourcing steel at exorbitant rates. The same applies to the construction sector.

The prices of steel are shooting up in India, China, and other international markets. In India, the price of steel ingot in Ludhiana was Rs 31,500 per metric tonnes on August 1, and this increased to Rs34, 500 per metric tonnes on August 14. Similarly, the steel prices in China also went up from 3,300 to 3,800 Chinese Yuan during the last three months.

According to the FOPSIA president, Badish Jindal, told The Tribune, “The increase is parallel with the scrap prices. The scrap prices have also gone up from Rs24, 000 to Rs28, 000 per tonne during the same period.”

The Impact on Scrap Rates

With the increase in steel price, the scrap rates have also gone high due to its unavailability. The industry is greatly dependent on domestic scrap, but only a small quantity of international scrap is available to tackle the current situation. The increase in steel prices in China is also another reason for the spike in the price of steel scraps as iron ore companies are exporting steel to China at high rates.

The Bottom Line

The reports reveal that it’s the first time that Chinese steel prices are higher than India, and it’s seen as an excellent opportunity for the Indian market to beat China. But, the increase in prices makes it harder for local companies to perform well in this current market situation.

 

Category : Metal

Tags : Steel Demand , Steel Import steel price, Chinese steel


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About Benny Jebaraj

I have been with recycleinme.com for the past four years and enjoy working as the Administrator of the Scrap Prices section.  I am graduated as Master of Business Administration in Human resource management. Why I have chosen this course is because I’m very much fond of Business Administrati .... more info

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