Indian domestic hot rolled coil (
HRC) prices have gained INR 500/mt ($8/mt) in the past week to levels of around INR 39,000/mt ($592/mt) ex-works amid an anticipated price hike by steel mills effective by September, traders said on Tuesday, August 27.
Several Mumbai and Kolkata-based traders have said that large domestic steel mills including
Essar Steel and
JSW Steel are considering increasing
HRC prices by around INR 1,000/mt ($16/mt) to offset costs of raw material like the landed cost of imported coking coal, which has risen due to the steady weakening of the rupee.
The domestic steel mills are expected to hike their
HRC base prices for September deliveries, leading to a slight surge in volume bookings ahead of the price increase, the traders said.
Sources stated that reports of a price hike have caught the market by surprise since traders had been expecting a correction in
HRC base price by steel mills in view of sluggish demand and the inventory build-up at distributors' stockyards.
The sources said that, with the Indian rupee slumping further by 1.5 percent on Monday to INR 64.31 to a dollar, steel mills are left with no option but to hike base prices, particularly those of flat products, to protect margins from a steep increase in the cost of imported coking coal.
However, most mills are aware of the risk of not being able to sustain higher prices given steadily falling demand, but the slide in the rupee has made such an increase inevitable and the only question in the market is over the likely size of the hike to be announced for deliveries next month, the sources said.