Belying expectations of market support measures, leading Indian integrated steel mills have commenced hiking flat product base prices by the range of INR 1,000-2,000/mt ($11/mt) for August deliveries, according to information collated from various companies. This is the first official announcement of an increase since May, while in the previous two months the market was following a downtrend.
Following the revision for August, the listed price for hot rolled coil (HRC) now stands at INR 50,400-51,800/mt ($574-590/mt) ex-mill and that for cold rolled coil (CRC) at INR 55,900-57,600/mt ($636-656/mt) ex-mill. Current official base prices are slightly above (by INR 500-900/mt) the tradable levels in the market seen by distributors. This signals that the secondary market is also slowly recovering and that demand expectations are rather strong.
Sources at at least two mills said that the producers have moved against general market expectations of supporting measures like reductions in base prices, volume discounts or extended credit terms to tide over prolonged declines in trade-level prices, largely emboldened by the hardening of finished steel prices in other producing countries like China and banking on the government increasing the 12 percent safeguard levy on imports.
They also cited the rise in input costs for the latest round of increases in listed prices as indicated by the hefty hike in iron ore prices announced by NMDC Limited for August deliveries setting a higher benchmark for private miners.
“Mills have taken a very calculated risk. Yes, trade conditions are very sluggish right now. But sacrificing margins to support the market impacts operational viability. We need to pass on higher input costs to the market. We expect the new price to be absorbed as market conditions will rebound as the monsoon seasons draws to an end by next month,” an official at a private mill said.
