Domestic steel prices in India fell to a 34-month low in October as demand from the auto and construction industries continued to fall.
Steel demand in India rose 5% in the first half of this fiscal year, below the 7.5% and 7.9% growth seen in fiscal 2017 and fiscal 2016, respectively. In addition, due to the decline in prices for Chinese steel, it is difficult for Indian manufacturers to sell their products on the foreign market for more than a competing neighbor.
Steel prices in India have witnessed a sharp correction in the past few months due to weakening domestic demand conditions, according to a report from the credit rating agency ICRA.
The ICRA also noted that in recent months, the difference between domestic and import prices has increased in favor of the external market.
Conditions for steel demand in the local market have become unfavorable in recent months. While domestic steel consumption grew 6.9%, during the first quarter of fiscal 2019, it fell to 4% in the second quarter. Consumption growth contracted another 0.2% in September 2019.
The moderation in steel demand is largely attributable to weakness in the automotive and construction sectors. The automotive sector continued to experience a decline in sales, with the decline in sales in the second quarter of fiscal 2019 only intensifying. Construction growth slowed to a seven-quarter low.
With the widening gap between domestic and domestic steel prices in recent months, Indian steelmakers have been focusing more on export markets, and hence steel exports from India have increased in the past two months.
