TV Narendran: Steel prices will remain elevated over the coming decade: TV Narendran

Steel prices may soften from the levels seen presently, but over the coming decade will remain higher on average than what was seen over the last decade as China reduces its exports while demand grows around the world, according to TV Narendran, the managing director of Tata Steel.

“I don’t think today’s steel prices will be here to stay, but over this decade we will see higher steel prices than last decade for sure,” Narendran said while speaking at the Times Network India Economic Conclave on Friday.

He estimated the metal to be priced between $650-750 a tonne on average over the coming decade, compared to around $400 between 2010 and 2020 and $550-600 between 2000 and 2010.

While China was the driver of commodity prices for the last couple of decades – first due to high consumption, pushing the prices up, and later due to higher exports, driving the prices down – now the country has a lesser influence on commodity prices, at least for steel, he said.

China has cut down its steel exports to meet its emission goals, reducing the steel supply in the global market. Meanwhile, governments across the world are investing in infrastructure to revive their pandemic-battered economies, which is driving up demand for commodities, especially steel.

“So, the demand will remain strong outside of China,” Narendran said. The Middle Kingdom accounted for 65% of global steel demand two years ago, which has reduced to 57% now and is likely to go under 50% in the future, he said.

And while demand remains on the higher side, steel supply may not be able to catch up with it soon.

“Nobody in the world can add as much capacity, as fast as China. So, I don’t see the supply side capacities being added as fast,” the Tata Steel boss said.