Sustained Chinese demand pushes up iron ore, steel prices in India

Nagpur: Domestic demand is yet to reach pre-lockdown levels but steel prices have jumped 7% in last one month. Increase in steel prices is one of the indicators of infrastructure and realty growth. This time, however, the rates are riding high on export demand, with China playing an important role.

Traders say for most of the lockdown period Indian steel mills survived on Chinese demand, which continues to hold steady. Any reduction in Chinese buying is likely to bring down steel prices too.

China has been buying huge quantity of iron ore, which is the basic raw material for making steel. Hectic Chinese buying has led to prices of iron ore rising by over 20% in little over a month in India. This, in turn, has left an impact on steel prices too, say traders.

Traders told TOI the rates of iron ore range from Rs4,500 to 6,000 a tonne, while steel products range from Rs35,000 to Rs40,000 a tonne. If iron ore prices are up by more than 20%, steel rates have increased by 7%.

Dipen Agrawal, president of Chamber of Associations of Maharashtra Industry and Trade (CAMIT), said the current rates of various types of steel products like TMT bars, structural steel and flat products is in the range of Rs35,000 to Rs40,000 a tonne. This is an increase of over Rs2,000 in a month.

Not only is China buying heavily, it has also stopped the dumping of end products in India, leading to further supply crunch. An increase of 5% to 7% is substantial for steel prices, he said.

Sohan Srivastava of Mahavir Steel Company, an industrial supplier, said prices of hot rolled steel have touched Rs42,000 to 44,000 a tonne. This month there has been a hike Rs2,000 to 4,000. There was a similar hike in the previous month. Lately, apart from iron ore, China has also started purchasing semi-finished iron ore hot rolled steel from India as it finds it cheaper here.

Nikunj Turakhia, president of Steel Users Association of India (SUFI), said, “Iron ore futures, which usually are in the range of $70 to $80, are ruling at $115 for January contracts. There is a major export demand in India. China made hectic purchases from April to June. Now, Chinese buying has come down to 20%. India continues to be a major exporter to Vietnam, apart from Europe,” he said.

China is an important factor in this trade so any let down in buying by it can have an impact on rates, he said. Turakhia suggested that India should also open up its markets by making imports easier. At present, there is an anti-dumping duty and quality restrictions on the commodity.

Rajesh Sarda, vice-president of Vidarbha Steel Chamber, said China, which was earlier buying from Brazil, diverted its purchases to India in the post-Covid period, leading to increase in iron ore prices. There has been a slight improvement in domestic demand too. However, the government must intervene and curb exports from India. The current rate of iron ore is beyond the means of steel producers.


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