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Steel prices to fall by 5% in three months: CMIE

New Delhi, June 20, 2009

Economic think-tank Centre for Monitoring Indian Economy expects steel prices to fall by around 5 per cent in the next three months.

"The expected dip in contract prices of iron ore and coal will put pressure on steel prices. We expect prices to decline by around 5 per cent in the next three months," CMIE said in its monthly review of Indian economy for June.

Domestic steel makers have urged the Ministry to increase import duty on the alloy to 15-20 per cent from 5 per cent now or impose safeguard duty of about 25 per cent.

"Any restrictive measures to curb imports, if implemented, will narrow the gap between the domestic and international prices to a maximum of 7-8 per cent. This indicates that prices have not bottomed out yet," CMIE said.

Meanwhile, Tata Steel today announced that it has raised prices of its products by up to Rs 750 a tonne on improved domestic demand and a firm global trend.

The company had also hiked the price of long products, used in construction activity, in the range of Rs 300-500 a tonne last month.

Steel prices remained flat or inched up marginally in May after correcting by 40-45 per cent in the previous six months ended April 2009. Hot Rolled Coil prices in May were at around Rs 26,000 per tonne.

CMIE said the demand for steel has improved and it would sustain in the current fiscal, but domestic prices would remain weak from the year-ago levels.

"This is because steel prices move in tandem with international prices, which will remain weak due to the subdued global economic environment," CMIE said.

While prices would decline, production growth would pick-up in the current fiscal, backed by healthy demand for long products.

"A pick-up in housing construction activity in the second half of 2009-10 due to low interest rates and a fall in property prices will also create new demand for long products," it said.    

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