India steel long futures have continued to make gains at the beginning of the week despite weak international trends resulting from poor construction sector demand where the product is used widely.
However, the US dollar weakness and recent announcement of Director of Mines in Karnataka that iron ore supplies from the state to the outside world will resume in two weeks has lent optimism to the steel industry that is already facing pressures on rising input costs.
The June steel long futures at National Commodity and Derivatives Exchange (NCDEX) has climbed 0.74% to 29980 while July contract has risen 0.70% to Rs 30,050 at 14.58 hrs on Monday noon trading. The June contract rose 2.02% last week to close at 29760 while the July contract rose 2.22% to 29190.
The world average long products prices move slightly upwards in May but it was due to exchange rate movements in an oversupplied market, according to an analysis by MEPS, a UK based consultancy.
The growth of Chinese construction sector during the month of May was strong enough, resulting in falling inventories of steel.
In India around 60% of the Steel production is for Long Products used mainly for the Construction activities with different form such as TMT, Bars, Wire Rod, Channels etc. Balance 40% of the Steel produced is for flat products, used for the electrical, automobile & engineering purpose.
The recovery in steel longs prices reflects an unusual trend as construction activity generally slows during the monsoon season, an analyst said.
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