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India: Steel ingot prices dip 3% on low demand from the domestic construction industry
Source: Business Standard

Prices of steel ingots have declined a further 3 per cent from Rs 18,900 a ton to Rs 19,550 a ton in the last four days at Mandi Gobindgarh owing to lack of demand from the domestic construction industry.

However, traders expect that the market would start witnessing demand in the first week of January, and that demand would gain momentum by the end of the second week.

They said the government would shortly release the funds allotted for the projects it planned for the current fiscal and, hence, construction activities would start soon thereafter, thereby boosting the demand for steel.

The Mandi Gobindgarh traders said steel prices have recovered recently by about Rs. 500 a ton on the back of industrial demand and on the hope of supplies to Pakistan.

"The physical market is witnessing hardly any activity now as the traders are currently in a holiday mood with Christmas just over and the New Year round the corner. The real activities in the market would start once they are back in the year 2006 with renewed enthusiasm. The traders expect to see price recovery of around Rs 500 a ton to Rs 20,000 by the end of January," said Anil Suraj, managing editor, Steel Town Weekly, and owner a steel mill at Gobindgarh.

"This (the recent price decline) is not a permanent downward movement as China is reducing its supply to the international market by cutting production. Declining Chinese supply would open a golden opportunity for Indian steel producers," Suraj added.

South Korea-based Posco had earlier announced that it cut selling prices, but it refrained from doing so with higher demand estimates from consumer industries.

Steel Authority of India (SAIL) expects its steel prices to remain stable for the rest of the fiscal year ending March 31, 2006. That means there will be neither a further fall nor a substantial rise in prices from here with strong inventory in the country.

This year, there has been over 7 per cent growth in demand in the domestic market, so prices should remain stable in the remaining part of the year, according to SAIL.