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India’s biggest steelmaker by market value said the surge in global steel prices could be threatened as global steel production increases and exports from China, the largest steel producer.
China’s rebar and hot-rolled coil futures increased more than 30% in the past year, driven by strong domestic demand and rising iron ore prices at most annual highs. However, China’s rebar and iron ore stocks have increased, indicating that construction activity may have slowed, as it is expected that the government may limit spending in the industry after the economy recovers from the New-Crown epidemic.
“Steel prices will remain robust for about two quarters,” said Seshagiri Rao, co-director of Mumbai-based JSW Steel. After that, “when more and more supplies come from the rest of the world and China exports more, prices will be under pressure.”
JSW share price has risen more than 45% over the past year, the company reported on Friday that it earned its best quarterly profit in nearly three years, driven by a surge in steel prices and a recovery in domestic demand.
However, Rao said the rise in production costs was worrying because iron ore prices might not be significantly revised in the short to medium term, and the recovery in coking coal demand would push up the price of this key raw material.
He said that while iron ore prices have been volatile in the near future due to many supply disruptions, they are likely to fall to about $125 a tonne this year, “mainly due to china's expected reduction in procurement in 2021.”
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- [Editor:wenxin]
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