The leading global brokerage firm Credit Suisse announced that it remains cautious on steel prices. According to them, it is quite doubtful whether the prices will be able to sustain the current elevated levels in the medium term.
The steel prices have started falling after almost two months of continuous rally. The prices of hot-rolled steel have dropped by nearly INR 500 per tonne over the past one week. The steel spreads in the country witnessed decline. The Chinese steel prices have been more or less resilient, hovering at around $800 to $900 per tonne. The prices in Europe too have started showing signs of weakness, dropping for the past few weeks.
Despite hike in steel prices by domestic mills in India, the commodity prices are still lower when compared to global steel prices. The Indian steel has been available at a discount to imports. According to Credit Suisse, the discount to imports is likely to stay, thus making domestic steel highly attractive.
The surge in steel prices was mainly on account of phenomenal jump in prices of iron ore and coking coal- the two key raw materials used in steelmaking. Of late, the iron ore prices have started falling. Coking coal too will follow suit, which in turn will reflect in steel prices, the brokerage firm said.
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