Local Indian cold rolled coil (CRC) prices of integrated steel mills have been maintained at last week’s levels after the previous hike, while, in a shift in market dynamics, standalone rolling mills have increased prices sharply over the past week factoring in their own increase in costs of production.
Sources said integrated steel mills have maintained prices at INR 60,800-61,500/mt ($830-840/mt) ex-works, with a significant upside bias as these producers have already committed to increasing hot rolled coil (HRC) prices aggressively over the course of the current month.
However, standalone rolling mills, largely located in the western region, have reported higher CRC prices in the range of around INR 62,000-63,000/mt ($846-860/mt) ex-work as their cost of procuring HRC from suppliers has been higher, increasing conversion costs compared to captive conversion by integrated steel mills, market sources said.
“There is sufficient pent-up demand still in user industries to absorb rising CRC prices. The higher-than-expected growth in the automobile industry seen in December is a very strong positive and the industry will sustain it through the last quarter ensuring a positive outlook for CRC prices and restocking levels,” an official at Jindal Steel and Power Limited (JSPL) said.
“Of course, there is a lot of talk of government intervention in controlling prices. But government intervention will skew the market. Any cap on steel prices will contravene the very dynamics of an open economy. How can there be a benchmark on the profitability of private producers?” the official said.
Sources said that, with the fiscal year drawing to a close, several western India-based rolling mills have started negotiating long-term supply contracts with southern India-based auto majors. Reports trickling into the market suggest that sellers are seeking at least a 25-30 percent increase in new contracted prices, against 10-15 percent in the previous year, indicating that the strong sellers’ market will continue in the near and medium terms.
$1 = INR 73.24
