New Delhi: According to our sources, domestic steel prices have begun to fall after peaking in the first week of April. As of June 18, Steel prices had plunged by more than 15% in the two months. Steel's declining trend is primarily supported by the regional market's muted demand and higher inventory level. However, Steel manufacturers feel that Steel prices have downturned for the third consecutive month. The measures announced by the Indian government to cool down the costs of certain industrial commodities have provoked a sharp slide in Steel prices.

Market participants expect domestic and international demand to increase only after the Russia-Ukraine conflict ends, lowering energy prices. As per the overseas players, the import activity into India is currently costlier because the currency is costlier. Additionally, the Indian authorities have imposed a 15% export duty on the export of Steel from May 2022, which has further robbed them of their competitiveness in the export market. Due to the muted demand from domestic and overseas buyers, market players anticipate further price declination, which will keep the buyers on the side-lines.

Despite low demand and limited transactions in the domestic market, steelmakers have not reduced capacity utilization. Flawed demand, pile-up inventory, and a drop in iron-ore costs, apart from the overhang of the resurgence of COVID-led disruptions in China and the continued hit in exports, are witnessed as sentiment dampeners. According to the Steel manufacturers, Steel prices are down in most domestic markets because traders are forced to sell their stockpiles. The market sentiment remains weak, and the quotation bookings are not at a good pace. Many are awaiting further price reductions before they run for larger bookings. Monsoons are arriving, leading to a further price drop because of delayed construction activities.

As per ChemAnalyst, there is an anticipation of another week-on-week plunge in Steel prices. Prices of raw materials like coking coal and iron ore are down too. Lower sponge iron production and weak demand from Steel mills, combined with a poor response to pellet exports, remain vital factors. More prominent Steel players will be in trouble due to higher inventory levels at their plants, and thus companies will be forced to cut production by the end of June; otherwise, they will end up with more casualties.