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Domestic steel prices at 3 years low, tapering Chinese production hint near term bottom

ICICIdirect Research 06 Sep 2024 DISCLAIMER

Global steel production is flattish in H1CY24 at 955 MT with India the sole shining star reporting healthy steel production growth of 7.5% YoY in H1CY24 at 74 million tonne (MT).

However, the domestic steel prices are currently quoting at a 3 year low at ~₹ 50,000/tonne (HRC) amid steep increase in steel imports from China and other ASEAN countries.

The emerging solace for the steel industry however is the decline in steel production in China which was down 9% YoY in July’24.

This could benefit Indian steel producers by potentially easing the import pressure from China.

Additionally, the government is considering imposing taxes & duties on imported steel thereby supporting metal prices, which would relieve domestic steel players by mitigating the impact of rising imports.                                                                         
This is amidst aggressive capex spend underway by steel players wherein capex spends at top 5 steel players is seen doubling from ~₹ 30,000 crore in FY24 to ~₹ 55,000 crore in FY25E & ~₹ 60,000 crore in FY26E.

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