Introduction

Steel is an important element of the construction industry that is made up of an alloy of iron, carbon and other elements like silicon, phosphorous, sulphur and manganese. There are more than 3500 grades of steel that have different physical, chemical and environmental purposes. These are hard, durable and resistant to unfavorable conditions like earthquakes, thunderstorms, fire, and pests. Steel is easy to install, durable and has high resistance power, due to which it is used to provide structure, wall support products, architectural claddings, rooftops, fixings, handrails, fixings, drainage and water systems.

Steel is divided into various types, which are steel rebar, alloy steel, carbon steel, stainless steel, structural steel, tool steel, and light gauge steel. The steel industry contributes 2% of India’s GDP, and about 2.5 million people are directly or indirectly employed in this sector.  

The rise in steel prices

Steel prices have seen a rise of 2-3 per cent in the range of Rs.1500-2500. The price of Hot-rolled coils (HRC) has reached Rs.68,000, and that of Cold-rolled coils (CRC) has reached Rs.86,000 per tonne. The prices of steel plates are hovering around Rs.82,000 to Rs.84,000 per tonne. The major reasons for this surge in prices are

• Global factors
• Supply constraints
• Input cost rise
• Strong demand
• Iron ore shortage

Global factors

According to VR Sharma, the MD of JSPL, the hikes have come primarily due to global factors, which include a rise in prices of imported coking coals and ferro-alloy. The companies are continuing to supply materials at a lower price for now. Once the contract ends, they can increase the prices according to the market and renew the contract.

Supply constraints

The global supply of steel was heavily affected by the Russia-Ukraine war. Both the nations are major producers and exporters of steel, exporting around 3-4 million tonnes of steel per month to the European market. And with their dispute, a shortage of 4-5 million tonnes of steel per month was created in the European market. And this demand was met by importing steel from the Indian and Chinese markets.

The prices in the European market are around Rs.15,000 higher per tonne for steel and with lockdown, Tangshan city of China, its largest exporter of steel, the demand for supply from India increased manifoldly. And with this increase in demand, export from India increased, and this reduced the available amount in India, and subsequently increased prices in India.

Input cost rise

The Russia-Ukraine war led to a supply shortage of many raw materials for the production of different goods. This led to an increase in the prices of many raw materials to shoot up, especially coking coal. And this eventually led to an increase in the prices of steel in the Indian market.

Strong demand

The steel demand globally increased after the Covid recession. But there was a gap in demand-supply of steel. And this sudden demand for steel increased its selling cost. The US, China, India and Europe were among the top users of steel during this period. 

Iron ore shortage

The increase in steel demand shot up the demand for iron ore. And the prices jumped off to 140% last year, reaching a 10-year high. In India, the price of iron ore reached Rs.6,560 per tonne from Rs.2560 per tonne before a year, with a 156% jump. 

There have been different national and international reasons for the increase in steel prices in India, ranging from an increase in exports to Covid-19 to providing relief to MSMEs and other steel dependent industries, the government has decided to increase the production of steel at a cheaper price. In the longer run, the government is looking to allot more funds and introduce a PLI scheme in speciality steel.

Explore our Construction Materials Catalog for a comprehensive view of our offerings, ensuring your projects stand tall amidst fluctuating steel prices.