Falling international prices of iron ore and coking coal are expected to increase profit margins for domestic steel manufacturers by 3% in this financial year. However, it is expected that the margins will be difficult to sustain given the depreciating rupee and unlikely scenario of the raw materials maintaining their low prices.
The price of coking coal has witnessed a recent fall due to increase in supply from Australia, the biggest producer of the commodity. Currently the price of coking coal stands at $215 a tonne as compared to the earlier high of $350 a tonne. Further iron ore prices have also slipped due to a slowdown in demand from China, which is its biggest producer as well consumer.
Despite the fall in raw materials, steel prices in India have maintained their current levels for the past few months due to the depreciating rupee. It is in fact expected that steel prices may inch up further when the rupee appreciates. Currently the price of domestic steel is around Rs 32,000 per tonne.
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