Indian domestic steel prices to remain under pressure.

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 : steelprices-china.com