Indian hot rolled coil (HRC) prices in local markets have consolidated during the past week in the range of around INR 39,500-40,000/mt ($635-644/mt) ex-works as more steel mills have revised their prices upwards, traders said on Wednesday, January 8.
Market sources said that Steel Authority of India Limited (SAIL) has announced a price increase of around INR 700/mt ($11/mt) during the week, in line with other mills like JSW Steel, Jindal Steel and Power Limited and Essar Steel which hiked their prices at the start of the New Year.
The sources said that, while the price revision by the steel mills, the first since September 2013, was anticipated by the market, ongoing slack demand has resulted in a low volume of transactions, indicating resistance to the higher prices.
With the Indian general election due in another four to five months, government expenditure on major infrastructure projects is expected to slow down and further drag down overall steel demand, the sources said.
The weakening of the rupee against the dollar will continue to provide protection from imports to domestic steel mills but higher prices coupled with the lack of improvement in demand in the medium term will result in a continuation of low volumes in the market, the sources said.
However, according to an official at SAIL, the price increase was inevitable against rising costs of energy and raw materials, while the increase margin was limited, keeping in view the market's ability to absorb the increase.