After ruling firm for over a year, global steel prices are likely to drop soon. As per industry experts, there could be an inventory pile-up in the next few months due to an 8.6 per cent rise in the global steel output since March. On an annualised basis, this growth in production could lead to an addition of 70 million tonnes of steel.

The average international price of hot-rolled coils is estimated at $260 per tonne. In the case of an inventory pile-up, prices could dip to $250 per tonne, said A S Firoz, chief economist in the joint plant committee of the steel ministry. However, he said with the current production level, it was unlikely that prices would drop beyond $250 per tonne.

"Global inventory levels of steel are under control at present, but a rise in production could result in an inventory pile-up, which in turn will put pressure on prices," Firoz told Business Standard.

While steel production has climbed 8.6 per cent in the last four months mainly due to increased output in countries like India, China, Japan and Russia, global consumption has grown only 2 per cent. The construction sector, which is the main consumer of steel, has remained weak.

That apart, China may reduce steel imports from last year's level since there is enough inventory already available.

The drop in global prices, however, may not immediately impact domestic steel prices since demand is high.

"Imports under the advance licence scheme are also minimal. Therefore, there is no pressure on the domestic steel market, which has helped to hold prices," said Firoz.