Indian domestic hot rolled coil (HRC) prices have edged up to levels of INR 37,500-38,000/mt ($694-703/mt) ex-works, as more producers have increased prices by $9-18/mt during the past week, traders said.
"Large steel mills like Steel Authority of India Limited (SAIL) and Jindal Steel & Power Limited (JSPL) have joined the bandwagon and hiked their prices," a Mumbai-based trader said.
"The price increases have been justified by increases in coking coal and iron ore prices. But higher HRC prices will deal a further blow to the already sluggish demand and market conditions. Volume off-take too has slumped in reaction," the trader said.
"In most overseas markets HRC prices are flat. Indian domestic HRC prices have constituted an exception and have been moving northwards only because major local producers have been seeking to offset input price increases at the risk of affecting demand," he added.
Several traders in Mumbai and Kolkata have told SteelOrbis that steel producers have expressed concern over worsening demand from the key consuming sectors but at the same time they were implementing prices hikes which would be detrimental to market conditions in the medium term.
The traders said that growth of domestic steel production had already moved ahead of growth in consumption during the period from April 2012 to February 2013.
All major steel mills have also expressed concerns over auto sales which recorded negative growth in February for the first time in over 10 years, with such market conditions hardly being conducive to price increases, the traders said.
Market sources said that, though these were early days to make assessments of inventories at producers' stockyards, the low volume off-take over the past week was an indicator of rising inventories which could force a price roll-back over the next few months.