New Delhi, Feb 13 (IANS): Strong domestic demand along with low finished inventory are expected to support domestic steel prices, Motilal Oswal Financial Services said in a report.

As per the report, India's steel consumption grew 9 per cent year-on-year and 3 per cent month-on-month to 9.97 mt in January 2021.

Notably, the growth came on a strong base period of January 20 which also witnessed demand growth of 9 per cent YoY.

This growth has been supported by robust demand from infrastructure and double-digit growth in auto, white goods, and consumer durables.

"Declining exports and rising imports further indicate a strong rebound in domestic demand. Lower domestic steel inventory provides comfort on steel prices," the report said.

"Domestic rebar prices, however, have come under pressure due to rising supply and softened demand in the construction segment, weighed by high prices of construction material such as cement and steel."

On the other hand, the report cited domestic HRC prices remained strong on the back of sustained demand and regional prices.

"However, easing iron ore prices, led by improving supply, are cushioning steel spreads."

"Thus, despite decline in steel prices, domestic steel spreads remain strong, up Rs 5,600-6,000 per tonne over the 3QFY21 average."