The expansion of reliance on green energy will lead to a continuous increase in steel prices globally, especially in India, until next year (2025), according to expectations of the Indian credit research and rating institution “Ind-Ra”.
The credit rating agency indicated that Chinese demand will contribute to this expected increase in steel prices, according to a report reviewed by the Specialized Energy Platform (based in Washington).
Expectations of continued global steel supply disruptions prompted the Indian Rating Corporation to maintain its future outlook on steel prices until the next fiscal year (the fiscal year in India begins the first of April and ends at the end of March of the new year).
Steel whose production depends on green energy, specifically hydrogen, is known as green steel, and the production of this type has witnessed rapid growth, and companies around the world have announced the construction of 200 projects until April 2024.
Steel and many other metals, such as copper and aluminum, are also used in the production of equipment and tools for green energy projects in general.
Shraddha Saraogi Garg, Director of the Indian Credit Rating Corporation “Inda-Ra”, explained the reason for expectations that steel prices will continue to rise by her institution, saying: “At a time when global economic growth continues to slow due to weak demand, strong demand for green energy appears to be limiting… – of this slowdown in the medium term, especially in India’s domestic market,” The Economic Times-Energy World reported.
The corporation expects the sector’s profitability to improve in the fiscal year 2025, thanks to high steel prices and producers’ efforts to rationalize and reduce costs, which is expected to lead to better profit margins.
However, the corporation warned of the risk of declining profit margins for steel sector companies in the near term, due to supply problems and changes in supply chains.
The British steel industry conglomerate had indicated that steel manufacturers in the United Kingdom paid prices for the electricity needed for production, equivalent to double the cost of their counterparts in France and Spain last spring, and that this undermines the chances of transitioning to green steel technologies in the country.
The conglomerate explained that the cost gap began to expand since 2015, the year it began tracking electricity prices.
This gap disappeared in 2022, during the energy crisis resulting from Russia’s invasion of Ukraine, as prices around the world reached record levels.
Source: Altaqa
