due to the benefits of increased public investments in infrastructure and the resurgence of the hot real estate market for residential properties. The stock prices of steel companies have been continuously increasing in recent months as steel prices surge. Some believe that steel stocks have already reached their peak and will decline in the coming months. However, there are reasons to believe that this upward trend may not be over yet.

Vikash Singh, a mining expert from Philip Capital, explains that steel prices in India are still considerably lower than import prices. This suggests that steel prices are likely to remain high or even increase further, rather than decreasing. Therefore, he advises people to hold onto steel company stocks such as SAIL and Tata Steel.

Steel prices in China have reached an all-time high, and prices in India have also seen a significant increase, following the global supply trend. Since the beginning of 2021, global steel prices have risen by about 10%. Both long steel and hot-rolled coil have experienced the most significant price increases among commodities since the beginning of the year, surpassing iron ore price increases.

The resurgence of steel prices in India and Asia in general not only reinforces confidence in the sustainability of steel prices, at least in the short term, but also leads brokerage firm Jefferies India to believe that prices will continue to rise due to strong demand.

Sandeep Kalia, an analyst at Wood Mackenzie, remarks that the global steel industry has returned to normal levels since the second half of last year. In 2020, world crude steel production, excluding China, declined by 8%. The driving force of the global steel market comes from China and India.

Amit Dixit, an analyst at Edelweiss Institutions Equities, attributes the recent price and stock increase in the steel industry to the fact that Tangshan City in China is cutting about 22 million tons of steel production this year. Although 22 million tons might not seem significant in the overall steel industry, it is crucial for the global steel transportation market, as no country can replace this quantity. Moreover, steel prices in the US and Europe have not only reached a 13-year high but have also surpassed pre-COVID-19 levels. With Tangshan City controlling production levels, the supply shortage is expected to continue until the fourth quarter of 2021.

However, predicting steel policies is challenging. If the Chinese government decides to ease carbon emissions regulations, steel prices may immediately decrease. Nevertheless, Amit Dixit does not believe this will happen and predicts that the second quarter of 2021 will be the best quarter for steel companies in many years.

Another unpredictable factor in the global steel market is iron ore. China imports nearly 1 billion tons of iron ore annually, and the shortage of iron ore due to COVID-19 has contributed significantly to the price surge. However, iron ore supply is expected to increase in the remaining months of 2021.

ANZ commodity analysts believe that nothing can stop iron ore prices from rising again. This week, iron ore prices on the Dalian Exchange (China) – a reference for the Asian market – increased by 1.2%. The price of 62% iron ore imported into China remains at its highest level in a month, at $170.5 per ton.