Global financial services firm JPMorgan said on Tuesday that it expects global steel prices to rise further in the coming days. JPMorgan highlighted that China export prices have already hit $620 per tonne and demand is expected to improve further post the Lunar New Year.
Notably, in India, domestic steel prices have recently risen by Rs 1,500 per tonne in January, with the landed prices now being Rs 60,000 per tonne.
JPMorgan sees scope for further steel price hikes of Rs 3,000 per tonne in the next 2-3 months.
JPMorgan pointed out that higher steel prices would create a strong earnings environment for Indian steel companies in the coming quarters. However, it said that higher prices of coking coal would limit their margin expansion.
Recently, rating agency CRISIL also noted in its report that the steel sector in India is expected to see healthy traction owing to supply chain alteration. The agency expects stabilisation in steel prices after a sharp drop in 2022.
Fitch Ratings also said in its ‘Global Steel Outlook for 2023’ report that it expected steel consumption outside China to improve, mostly due to dynamic growth in India, Southeast Asia, and the US.
“Incremental steel inventories have built up in the system, with competition in unprotected markets intensifying. As a result, margins have visibly come off post-Covid peaks and are normalising in 2023, a significant change compared to 2022 outside China,” the report said.
