Local Indian hot rolled coil (HRC) tradable prices have continued to gain ground as steel mills start to talk officially of more price increases in the short term even though trading volumes and sentiments have continued to become more cautious in reaction to the exponential spread of the pandemic and apprehensions of degrowth in manufacturing, SteelOrbis learned from trade and industry circles on Monday, April 19.
Sources said that HRC tradable prices have increased to INR 59,000-62,000/mt ($787-827/mt) ex-Mumbai, up from levels of INR 58,000-60,000/mt ($773-800/mt) a week ago.
Steel mills have maintained base priced at INR 58,000-60,000/mt ($773-800/mt) ex-works, while the market anticipates another round of base price increases in the range of INR 2,000-3,000/mt ($27-40/mt) before the end of the current month.
“We have seen price increases in the last three months, and I see this rally continuing. Prices will not cool down before two years,” V R Sharma, managing director of Jindal Steel and Power Limited (JSPL), said.
“Prices are rising because of good demand in the economy. This year, India will see its highest-ever steel production. But total demand will outstrip production. Production this year will be around 125 million mt, but demand will outstrip it at 145 million mt. Last fiscal year, production was around 104 million mt and demand was 112 million mt. These are being reflected in higher prices,” he added.
However, the optimism is significantly muted in trade circles with several traders reporting reducing their fresh bookings as more and more regions go into stricter lockdown conditions, particularly the industrial states of the north and west.
A leading Mumbai-based steel distributor has said that much of the optimism is based on the release of pent-up demand over the past four to five months and that producers are extrapolating past data to forecast the future without factoring in the impact of the new uncertainty from the second wave of the pandemic. Infection cases have been rising at a much faster rate than last year and already reports of disruptions of manufacturing activities and of migrations of workforce from industrial urban regions back to rural areas have emerged.
$1 = INR 75.00