Economic Times reported that Indian domestic steel prices are expected to remain under pressure largely due to weak domestic fundamentals and rising threat of imports,

According to Steels-India, a research report by Bank of America-Merrill Lynch “A weaker outlook for iron ore/coking coal is likely to drag steel prices lower as steel has become a tolling business given overcapacity We cut domestic steel price estimates over FY13-14E by 1-2%.”

It said "Domestic steel prices are about INR 33,000 per tonne to INR 33,500 per tonne, down by 10% to 11% from the recent peak as demand remains muted and inventories are high. Sharp correction in Chinese prices and a stronger INR have increased the import threat. Domestic steel prices are now at a 2% to 3% premium to import parity.”

The report added “Pricing power could weaken more as domestic steel markets could move into oversupply over the next 6 to 8 months as expected modest improvement in demand in FY14E is likely to be inadequate to absorb the expected supply rise from new capacity,".

Source - ET

(www.steelguru.com)