Steel exporters drop China as prices dip

Steel prices in China are hovering much below the international level with major steel makers including India diverting their output to more lucrative markets.

Hot rolled coil (HRC) prices in China, at present were at $540 as opposed to $600 in the Korean or European markets.

Industry sources said, the reason behind the meltdown in prices was due to lack of buying interest from traders in China as the country was no longer lapping up steel.

The steel makers cited inventory build-up as one of the reasons behind the subdued interest.Till last year, around 15-20 per cent of India's exports of 3.5 million tonne were being made to China.

However, a warning from the Chinese government to curb exports had resulted in major producers' restraining from the market. Industry sources said, "We are not exporting much to China any more."

The focus had now shifted to west Asian and European markets. A section of the steel producers also said that the steel companies in China were facing financing problems, with major financial institutions refusing to grant credit even for purchase of raw materials.

Till the middle of last year, China was one of the dominant export markets for steel makers around the world and was a key issue in determining steel prices. A demand-supply gap in the market could sway steel prices in either direction.

However, industry sources said, despite the increase in prices in the European markets, scrap prices over the last 6 days had come down by around $50, which could have a cascading effect on steel prices.

Auto grade scrap had come down from $310 to $265 while heavy melting scrap dipped even further.

"If the decline continues then steel prices across the globe could dip including India" they said.