Low prices, rising costs cast a shadow on steel companies

Sluggishness in real estate, construction likely to keep steel prices low, says ICRA

Rising input costs and softening of steel prices are likely to throw a long shadow on steel companies’ performance in the fourth quarter (Q4) of the current financial year (2016-17, or FY17).

Spot prices of coking coal, a key input in manufacturing steel, have more than halved from the peak level of $320 (Rs 20,800) a tonne in December; but contract prices for March are at $285 (Rs 18,525) a tonne. On the other hand, a sluggish demand in the domestic sector has pulled down steel prices.

In February, steel prices came down by Rs 2,000 a tonne. This month,