Steel prices may rise on festivals, monsoon: SAIL head

Indian steelmakers may raise prices as construction restarts at the end of the monsoons and the festival season’s onset spurs home and car purchases, Steel Authority of India Chairman C S Verma said.

Prices have “bottomed out” and may rebound in September after remaining flat for three months, Verma, who took charge of the nation’s second-biggest producer in June, said yesterday in an interview. He didn’t give a specific forecast.

India’s steel demand, which expanded 7.6 per cent in the last fiscal year, is forecast to grow 9 per cent in the year ending March 31, helped by demand for automobiles and spending on roads and ports. Home renovations and sales of cars and houses start increasing from September and usually peak on Diwali, the festival of lights, on November 5.

“There has been a revival in consumption in the last 10 days and it should further rise next month,” Verma said. “The festivals are the peak season for steel consumption and with global demand also recovering, prices look firm.” Shares of Steel Authority rose as much as 0.6 per cent to Rs 186.20 in Mumbai. The key Sensitive Index, or Sensex, rose 0.2 per cent.

India’s cement shares may outperform the nation’s stock market as construction increases after the monsoon season and record government spending on infrastructure drives demand, UTI Asset Management Co. said on August 24. India sold 158,764 cars in July, an increase of 38 per cent from a year earlier, according to data from the Society of Indian Automobile Manufacturers.

Reuters adds: Meanwhile, BHP Billiton, the world's biggest miner, on Wednesday signalled a looming slowdown in global steel-making raw materials markets due to overproduction of steel.

"With global steel production running ahead of real demand in the quarter ended June 2010, we expect output to soften from the record highs achieved in April this year," BHP said.

"This will impact near-term demand for steel-making raw materials. However, the fundamentals remain strong in those commodities, particularly iron ore, where there is a lack of low cost supply response expected over the next one to two years," the world No. 3 producer of iron ore said.