Operating conditions for steel manufacturers have deteriorated with a further fall in steel prices and rising coking coal prices. The demand for materials continues to remain muted.

Indian producers can capitalize on the opportunities in the export markets against the location of the ongoing energy crisis in Europe. “Domestic hot-rolled coil prices dropped by Rs700 per tonne week-on-week to Rs55,200 per tonne”, according to a report by Nomura Financial Advisory and Securities. The moderate price in September so far is 3% below the average in August. Further, there is boosted pressure on margins due to a sharp rise in coking coal costs after a brief period of softening trend. However, on the bright side, iron ore prices continue to remain stable.

Even so, a momentous pick in demand for the metal is essential. The September quarter (Q2FY23) is expected to handle the brunt of seasonality and the demand is likely to enhance subsequently.

Our channel checks indicate that dealers are adopting a cautiously optimistic approach towards demand revival in H2FY23,” mentioned analysts at Edelweiss Securities.

Ministry of Commerce has witnessed a decline in steel prices since the imposition of export duty of 15% in May-22, but is waiting to ascertain if the price decline resulted from weak seasonal demand during the monsoon season or due to the export duty cut, said the Nomura report. “A consideration on rollback or cut in export duty will be taken after ascertaining reasons behind the fall. The duty may be retained unless it is established that the decline in prices was on duty imposition and not due to the seasonal monsoon factor“.