‘Steel prices will come down as production increases’

Union Steel Minister, Ram Chandra Prasad Singh, on Thursday said steel prices are expected to come down once production increases. The Ministry is looking to focus on ramping up steel production in the country so as to be able to meet the anticipated surge in demand moving forward.

Steel, being a “deregulated sector”, market forces determine the rate. Prices of steel are cyclical in nature and depend on supply side issues. The government has, in the recent past, reduced customs duty on many items which are being imported to improve the supply side. “Steel prices are cyclical in nature and they are determined by market forces. Our objective is to ramp up production and when production increases prices will come down,” Singh said at a press conference post the inauguration of MSTC’s new corporate building here today.

Raw material shortage

Iron ore, which is one of the key raw materials for steel production, has been in short supply and there has been a spike in prices. Price of iron ore had been ruling at around ₹15,000-16,000 a tonne till recently and this was impacting steel consumption. Prices have however dropped by around 20 per cent over the last two months and are currently hovering around ₹11,000-11,500 a tonne. The industry has been blaming iron ore shortage and the steep rise in prices on large scale inter-state export of ore.

Also read: We expect steel consumption to go back to pre-Covid level this year: Tata Steel’s TV Narendran

“Raw material (iron ore) production was impacted due to Covid and hence prices were up. Exports of ore had also increased.....we are conscious about this and are watchful. Prices have come down a bit over the last two months,” he said.

There is likely to be a steady demand for iron ore from the domestic steel industry due to the emphasis given by the government on growing the infrastructure, power, cement and other such sectors. India would have to double its iron ore capacity so as to be able to achieve the target of 300 million tonne of steel production by 2030 as envisaged in the NSP (National Steel Policy) 2017.

“Steel demand is expected to increase moving forward backed by infrastructure projects, government schemes and construction especially housing demand. Our per capita consumption is also very low so our utilisation will improve and then the production will also increase,” he pointed out.