Prices for iron ore and steel have been decreasing amid lower demand in India and China

Steel demand has been plummeting in the recent months owing to supply surplus and slackened construction activities in China as is reported from the official construction PMI for May that slipped to 54.4 from 56.3 recorded in April 2024. This has pushed iron ore prices down owing to weak steel demand, lately.

Experts noted that the consumption of steelmaking ingredients had declined alongside a reduction in steel output. Despite this trend, some steel mills might begin stockpiling to meet production needs.

Steel prices in India have been facing downward pressure due to several factors. The Steel Authority of India (SAIL) reported a nearly 3% drop in fourth-quarter profits, primarily due to softer steel prices and rising costs. The state-owned company's consolidated net profit for the quarter ending March 31 fell to 11.26 billion rupees from 11.59 billion rupees the previous year.

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The decline in steel prices can be attributed to higher imports from China, which is selling finished steel products at lower prices. This situation is compounded by China's struggling property sector and high U.S. tariffs, leading Chinese producers to seek other markets, including India. Additionally, the costs of key steelmaking ingredients like coking coal and iron ore surged during the quarter, further squeezing the profits of Indian steelmakers. This combination of increased imports and rising raw material costs has significantly impacted the Indian steel industry's pricing dynamics.