Indian steel prices seen firm in 2010 amid rising demand

Prices of steel products in India are expected to remain firm through 2010 after dipping nearly a fifth year-on-year on global demand recovery, according to industry sources. They, however, do not expect prices to hit 2008 peak levels as imports are gaining momentum.

Prices of key raw materials, iron ore and coking coal, have risen 60 -70 per cent from their 2009 lows triggering price hikes globally even as local players are pushing for 5-7 per cent hikes in January as demand picks up.

Indian steel is currently quoting at Rs35,290 a tonne even as consumption in the second fastest growth economy is set to rise over 12 per cent compared with the global usage of 9.2 per cent.

The Indian government this year provided fiscal stimulus packages to various sectors, including infrastructure, real estate and automobiles and made credit available on softer terms to farmers as the economy struggled in the economic slowdown.

While steel makers reported losses or poor profit growth in the first half of 2009 as input costs increased, and interest rates soared amid falling demand, they posted profits in the later half as measures introduced by the government led to a revival of demand.

Industry sources are projecting an upward trend in 2010 on robust demand and rising raw material prices.