Steel prices have been quite volatile and according to reports they have been a little softer because of the monsoon season, Seshagiri Rao, Joint MD & Group CFO, JSW Steel, discussed his outlook on steel prices.

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According to Rao, “Steel demand has picked up but it is still lower than anticipated. The month of April 2021 saw 6.7 million tonne of demand, which has picked up. In the month of July, it was close to 8.25 million tonne. It is still lower than the peak that we saw in the month of March 2021, which was close to 10 million tonne. There is some sluggishness in the overall demand into monsoon season but it is supplemented by exports, which is growing. In the month of July, exports from India were 1.5 million tonne.”

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He further said, “Manufacturing and exports are the two drivers. Auto components and engineering goods exports are also causing incremental steel demand in India. Relative to the demand, the production is not able to catch up.”

On semiconductor shortage issue, he said, “In the auto sector, the production schedules are getting postponed because of the chip shortage.”

On container shortage, he said, “The exports which are happening across all the sectors from India are getting piled up at the ports, either due to lack of shipping lines or due to congestion. Exports could have been much better if this situation was not there.”

“There has been volatility in the prices for the last two months. But after that, there has been a recovery. If you look at continent by continent, the prices have fallen by 30-40 Euros. Otherwise, in all the regions, the fall we have experienced in the month of July has come back once again. The underlying demand is very strong. That is the reason why the prices again recovered. From July 1 to September 1, prices have remained more or less at the same level as on July 1. The prices have fallen by 4-5 percent and again, it recovered as on date,” he explained.

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The steel prices in the retail market are much higher compared to what auto sector was paying in this quarter. “So the steel industry requested for increase, so negotiations are on, it will get resolved in the next few days. For the long and flat products in the auto sector, the range is from 5-10 percent,” he said.

Globally, iron ore prices got corrected. He believes that there is a need for domestic price correction in iron ore.

He is hopeful of seeing correction in NMDC prices. “We are eagerly waiting for NMDC prices to be announced. We hope – in line with what happened globally, NMDC prices will get corrected,” he stated.

For the full interview, watch the accompanying video.

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(Edited by : Dipika Ghosh)