Local Indian hot rolled coil (HRC) prices have edged up by INR 200-300/mt ($3-5/mt) during the past week to around INR 40,800/mt ($678/mt) ex-works amid market anticipations of hikes in prices, traders said on Tuesday, June 24.
"HRC prices are firming up amid market expectations of across-the-board steel price hikes from domestic steel mills," a Mumbai-based trader said.
"Market expectations are that steel mills will increase HRC prices by at least INR 1,000/mt ($17/mt) in July," he said.
"The trigger for the price increase despite low demand and volumes is the government announcing a 6.5 percent hike in freight charges by the state-run Indian Railways," he added.
Market sources state that prices for all steel products have moved up in reaction to the higher railway freight charges announced.
According to an official with an eastern India-based steel mill, the higher railway freight costs have pushed up HRC prices in the markets, but the INR 300/mt ($5/mt) rise is not sufficient since the higher freight charges will impact both ends of production, i.e., raw material and finished products.
"Higher freight costs will push up costs of all raw materials and finished products. We are still in the process of working out the impact of the higher freight charges. However, the minimum increase in the HRC base price will not be less than $17/mt if the full impact of the freight charge increase is to be passed on by steel mills," he added.