Steel fell drastically this month testing almost its 3 year low. The fall in demand from its key consuming sectors such as construction, automotive and rise in production figures led to the severe drop in prices. In the first five months of this year China reported a 0.4% rise in its production. In case of Indian scenario, the steel minister is considering to put an additional import tax on steel to protect domestic industries from cheap imports. India currently imposes a tax of 5% on steel imports, which domestic industry would like to see hiked up to 20%.
Trading platform that even a 5 year old can trade. Join now The government is also expected to expand production capacity at state-owned firms Steel Authority of India Ltd and Rashtriya Ispat Nigam Ltd. The output capacity of SAIL could go up to 26 million tonnes in the next three years from about 15 million now, while RINL capacity could reach 6 million tonnes in the next two years from 3 million now. Steel had been in a downtrend for a long time and was beaten down badly last month, pushing it to touch lows of around Rs17660/Mt after a gap of around 3 years. But these lower levels did not sustain and after testing the support of Rs18800/Mt, it recovered from oversold territory as depicted in weekly charts.
The recovery in the metal has been quite strong but has not been able to cross the trend line resistance, so the scenario for coming days seems to be of cautious optimism as higher levels might invite selling pressure yet again and only sustainability above Rs21700Mt can clear the path, envisaging higher levels of around Rs.23400/Mt and then even Rs 24700/Mt.'
Courtesy: Religare Commodities Explore Commodity Online Mobile Services
