Why a spike in global steel prices is good for the Indian Steel Industry!

The global steel market has been experiencing a steady rise in prices since June 2017. With various reasons attributed to this price rise, the presiding one is the gradual cutback in production by China’s steel sector. As one of the largest producers and consumers of steel in the world, the Chinese steel industry’s course is a catalyst for price movements in the global steel industry.

Reports from the ICRA, an independent credit rating organization, have found that Indian steel prices have increased 10% since June 2017. The factor that has most heavily influenced this rise in steel prices is the Chinese government’s move to tackle surplus domestic production. Sitting on a surplus capacity of 300 MT, the government has closed down units capable of producing 42 MT between  January-May 2017, in addition to the 65 MT facilities they shut down last year. The mixture of sustained demand and restricted supply is what is contributing to the momentum in steel prices.

Taking a cue from international trends, Steel prices in India have risen by 10% despite a modest 4.4% growth in domestic demand. A 66% rise in exports from domestic steel mills is a further indicator of the resurgence of India’s Steel industry after a rather modest 2016. Steel mills in India have been able to register a 7% growth in production according to the ICRA report. All these signs point to a comfortable road ahead for the foreseeable future. 

As a member of India’s Steel industry, Agni Steels is optimistic and excited to get to work on the fresh opportunities and challenges that the rising demand will bring.