Steel prices ease over 10%, coal crisis plays havoc on cos
KOLKATA: Steel sector players are facing some heat owing to high input commodity prices as finished steel products have begun to decline since April after the Russia-Ukraine war broke out.
Prices in the long products segment have declined on an average of 10-15% to ₹57,000 per tonne in the Kolkata market from a high of ₹65,000 a tonne. Coal which is a key raw material for the secondary steel producers. has turned out to be the major point of concern, officials said. Steel prices from leading players were higher at ₹75,000-76,000 per tonne at its peak.
“Steel products, be it construction like TMT bars and structurals have come down between 10 and 15% due to sluggish demand and are expected to ease a little more before it settles. While our costs have soared,” Steel Rolling Mills Association chairman Vivek Adukia told PTI.
“Our costs have increased by 50% despite a compromise on quality of inputs, secondary steel producers using Direct Reduced Iron require high quality thermal coal to make sponge iron. The imported coal price which was $120 per tonne had shot up to $300 per tonne after the war broke out. The price is not sustainable unless passed through,” he said.
“Steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around ₹60,000 per tonne by the end of the current fiscal year, down from the ₹76,000 per tonne peak it scaled last month”, rating agency Crisil said in its latlion est report. A PSU steel maker without divulging details said there had been some easing in the price of steel.
“Demand has gone up after covid because of a lot of spending by various governments. At the same time, supply had not caught up. So there is a reason why we have seen a very big increase in steel prices. Now we are seeing a slight correction in steel prices,” JSW Steel joint managing director Seshagiri Rao had said recently. He, however, said it was anybody’s guess whether steel prices had peaked out.
Tata Steel MD & CEO T V Narendran, however, have a contrarian view and had said recently that as far as “first quarter” of FY23 is concerned, “we expect in India the prices to be ₹8,000-8,500 per tonne higher than fourth quarter which will cover the cost increases that we are facing due to high coal prices.”
Adukia said steel companies are now forced to import coal for survival as Coal India is not lending its ears to their demand.