Shrinking Exports Boosted Steel Inventory Build-Up

SEATTLE (Scrap Monster): The reduced exports of steel products from India are seen adding up to the build-up of the inventory of the material, thus forcing many steel producers to adjust their production accordingly. The domestic steel demand is also seen impacted by ongoing monsoon in key steel-consuming regions of the country.

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According to Nomura analysts, the weak demand has put pressure on steel prices. The prices of hot rolled coil (HRC) saw a month-on-month decline by INR 3,500 per tonne to INR 58,500 per tonne in the month of August. Similarly, cold rolled coil prices too were down by INR 2,500 per tonne to INR 66,000 per tonne. Meantime, HRC prices on the trade channel recorded a dip by INR 400 per tonne over the prior week, demonstrating ongoing weak steel demand amid oversupplies.

The steel production in the country remained flat, falling marginally by 0.7% over the previous month in July this year. The imposition of export duty has led to accumulation in domestic inventory. The inventory position reported by the Joint Plant Committee (JPC) is most likely to witness an upward revision in August, mainly on account of huge accumulation by large mills in the country.