Good times for steel makers to continue

Has the steel upcycle hit a plateau?

- Sumit Maitra & Tamajit Pain

Domestic demand was subdued during the first quarter of the current financial year with buoyant export markets providing some support to most of the primary steel makers.

Domestic finished steel consumption was lower compared to the previous quarter due to the second wave of the pandemic though growth was strong compared to the corresponding quarter of 2020 when the economy was on virtual standstill.

During the quarter, long steel prices were relatively subdued compared to flat steel prices, which were also boosted by a strong export markets.

Officials of Jindal Steel and Power, whose exports accounted for 34 percent in the first quarter, said the share of exports would have been higher in the absence of logistical challenges posed by unfavorable weather leading to congestion at ports.

Crude steel production, consumption rise in July

India’s crude steel production was up 3.9 percent month-on-month (m-o-m) in July at 9.725 million tons (mt), according to initial provisional data from the steel ministry.

Hot metal production was up 5.8 percent in July at 6.588 mt, while finished steel production was up 2.8 percent m-o-m at 8.996 mt, the data showed.

Finished steel consumption moved up marginally by 0.65 percent to 8.245 mt in July while imports rose 1.9 percent m-o-m to 4,10,000 tons during July. Exports during the period rose 10.5 percent m-o-m to 1.512 mt in July.

Strong demand to support prices

Some of the fundamental factors supporting the prices so far still exist including the demand pull indicating that there could be some stream left in steel prices with likely revival in demand post monsoon.

In the first half of 2021, global steel makers witnessed high margins, improved demand and low inventories.

Things would be better in coming months, says global steel major ArcelorMittal.