India Steel Prices Expected To Decline In April As Coronavirus Stalls Manufacturing
The coronavirus-triggered lockdown in India has prompted several manufacturing firms to halt production, affecting steel demand.
Steel prices, which have risen steadily since October 2019 and remained steady so far this month, are expected to decline in April as the coronavirus outbreak has stalled global trade. China raising tax rebate on steel exports may add to the downward pressure on prices.
Prices of domestic hot-rolled coil steel in March fell marginally over the previous month to Rs 38,700 per tonne, according to data provided by Edelweiss Securities and BloombergQuint’s calculations.
Near-Term Hit
With the coronavirus outbreak already affecting most forms of manufacturing in India, dampening demand for steel, prices of domestic hot-rolled coil steel are expected to decline in the near term.
“Demand pick-up has belied expectations so far,” Amit Dixit, assistant vice president of research at Edelweiss Securities, told BloombergQuint. “Domestic companies which deploy large workforce at their mills or plants would also have severe repercussions of the Covid-19.”
Chinese Export Rebate
As China increased export tax rebates from 9 percent to 13 percent on almost 1,500 products, including steel, to aid manufacturers affected by the pandemic, Indian producers are bracing for the recurring problem of rising imports of the commodity.
“The move of VAT rebate increment is expected to support exports out of China and increase it to Asian markets and BRI-countries, given that other export destinations like Europe and the U.S. are under the grip of Covid-19,” Vishal Chandak, senior research analyst at Emkay Global, told BloombergQuint.
Also Read: Coronavirus Boosts Indian Steel Export Prospects as China Chokes
Blow To Targets
That could result in Indian companies failing to meet their production targets.
Investec said in a recent report that their channel checks reveal limited new inquiries for exports, implying a risk to pricing or mills resorting to production cuts in the first half of the next financial year.
JSW Steel Ltd. had already slashed its sales and production guidance by 3 percent each for the quarter ended September as volumes declined in the first half of the ongoing fiscal.