New Delhi: The domestic steel prices may fall by up to Rs3,000 a tonne after June, if the rates of coking coal decline in the global market, steel secretary PK Rastogi said on Tuesday.
“It is likely that coking coal prices may decline after June. This may have a reflection on domestic steel prices, which could soften by up to Rs3,000 a tonne,” Rastogi said.
The Indian steel majors, including SAIL, Tata Steel, RINL and JSW, have long-term agreements (LTA) with overseas mining firms in Australia and New Zealand for supply of coking coal.
As per the 2008 LTAs, the steel producers are procuring coking coal for about $300 per tonne, whereas in the spot market rates have declined to around $200 a tonne.
Expecting the rates to dip after June following a decline in demand for the raw material from steel sector, Rastogi said it would have a positive implication on steel prices.
In the domestic market, demand for steel has nosedived from sectors like construction and automobile, resulting in over 40% fall in prices of the commodity, which at present is selling at about Rs31,000 a tonne.
Though admitting the rates have come down, he said the prices could have further dipped, but for high coking coal costs.
Asked by when does the government see the domestic demand for steel to pick up, the secretary said it would depend upon the health of the economy.
Nevertheless, he added the steel sector may register a 4% growth rate this fiscal.
“With the government coming out with various fiscal measures, things should improve in the infrastructure sector and in turn give a boost to the steel industry,” he said.