Local Indian hot rolled coil (HRC) prices have the potential to rise by INR 6,000-7,000/mt ($81-94/mt) in May and June this year, as domestic steel mills will benefit from the withdrawal of the export tax rebate on steel in China, financial advisory firms J P Morgan and Kotak Institutional Investor (KII) said in their reports on Friday, April 30.
Commenting of the share prices of steel companies hitting a life-time high at stock exchanges, the firms said that withdrawal of the export tax rebate on major finished steel products and the cut in import duties on semis and ferrous scrap will offer strong support for international steel prices and enable Indian steel mills to increase local prices.
J P Morgan in its report said that Tata Steel and JSW will benefit from the cut in the export tax rebate in China, while state-run Steel Authority of India Limited (SAIL) will also benefit, having its own iron ore mines and insulated from raw material cost increases.
The firms, however, cautioned that the second wave of the pandemic poses a big risk and may lead to a slowdown in domestic demand. But if the export market continues to be strong, large Indian integrated steel mills may not face strong headwinds, they affirmed.