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Business News›Industry›Ind'l Goods/Svs›Steel›Steel prices to stay firm as tight supply, duties fuel dealer inventory build-up: Centrum report

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Steel prices to stay firm as tight supply, duties fuel dealer inventory build-up: Centrum report
Synopsis

Domestic steel prices are forecasted to remain strong in the coming months due to tight supply constraints. Dealers are actively building inventory in anticipation of further price hikes as demand surpasses supply. While demand is generally healthy, significant factors include rising prices and lower allocations from primary producers. The festive season may cause temporary demand fluctuations, particularly in Gujarat.

ANI

New Delhi: Domestic steel prices are expected to remain firm in the near term as tight supply, import duties and elevated raw material costs encourage dealers to build inventory in anticipation of further price increases, brokerage firm Centrum Broking said in a report based on dealer interactions.



Centrum said any correction in steel prices is likely to be limited and could be deferred until late November or early December. The report noted that supply remains tight, with allocations from primary producers falling short of demand and dealers often receiving only 50-75 per cent of the volumes they request.



Also Read: Steel prices at 4-year high; trend to continue in H2: Report

"Steel dealers have shifted from need-based purchasing to actively building inventory in anticipation of further price increases," the report said, adding that this has supported strong channel demand, although part of the recent strength reflects inventory accumulation.



The report further added that domestic flat steel prices have remained on a sustained uptrend, supported by supply constraints, maintenance shutdowns, import duties and elevated raw material costs, particularly coking coal.




The channel behaviour has also changed in recent months. According to Centrum, dealers were largely following a need-based procurement strategy earlier, but rising prices and tighter availability have resulted in inventory build-up across the distribution channel.

"While current channel activity is strong, the dealer's comments suggest that part of the recent demand strength is driven by advance buying and inventory accumulation, rather than solely by underlying end-use consumption," the report said.

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