Rating agency Crisil in its latest report has said that steel prices are set to go up further due to rising raw material prices in China and the expected coal or power shortage that will potentially weigh on the earlier-anticipated price correction. It noted that after a brief cooling down in July-September, domestic steel prices began to rise again in October, with major steelmakers increasing the price of flat steel by Rs 1,500-3,000 per tonne. Long steel prices also rose Rs 3,000 per tonne in the first week of October, led by higher coal prices and healthy demand.
According to the report, despite this material increase, domestic flat steel is priced at Rs 10,000-12,000 per tonne, lower than global landed prices. China's hot-rolled coil was around $980 per tonne in September, which kept domestic prices up. That means domestic prices are 13-15 per cent lower than global landed prices. All this can be stated differently as having room to raise domestic prices further, and a correction this quarter appears unlikely as prices are likely to hold.
The agency expects prices to retain their upward bias through this quarter. While the January-September 2021 period saw the cost rising, led by the iron ore rally, the October-December season is likely to see higher cost inflation, led by coking coal and thermal coal, along with other inputs such as ferroalloys, whose prices have surged since September.
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