Local Indian hot rolled coil (
HRC) prices have risen by INR 500-1,000/mt in the past week to the range of INR 41,000-41,500/mt ($657-664/mt) ex-works, as several large steel mills have hiked their prices for the second time since the start of 2014, traders said on Wednesday, February 5.
Large steel mills including Steel Authority of
India Limited (
SAIL),
JSW Steel and
Essar Steel have increased their prices by a range of INR 500-1,200/mt ($8-19/mt) citing a rise in input costs, a Mumbai-based trader said.
According to the trader, steel mills have cited improved demand from sectors like automotive and white goods, whereas he challenged this argument on the grounds that inventories at most distributors are high and booking volumes have continued to be low.
"We are increasing prices by INR 1,200/mt ($19/mt) across all products to offset the rising cost of imported input like coking coal and given the shortage of iron ore," an official at
JSW Steel said.
However, market sources said that the two rounds of price increases effected by the steel mills since January are not justifiable as an upturn in demand is still not evident despite what the producers state.
Moreover, it is possible to contest the cited factor of higher input costs since global coking coal prices have been softening on the one hand and higher dollar earnings by steel mills from overseas shipments of steel products have been insulating steel mills from costs of imported coking coal despite the weakening of the Indian rupee, market sources said.
Citing reports, a Kolkata-based trader said that Australian coking coal prices have dipped to $127/mt FOB, a two-year low. While domestic freight rates have increased, steel producers have been taking advantage of low import competition to increase margins and not pass on softer coking coal prices to end-users, the trader added