Local Indian hot rolled coil (HRC) prices have remained at higher levels during the past week, but there has been a slight fall in trading activity and an easing of premiums in regional markets even though the outlook remains positive and there are signals from producers that hikes in base prices will be sustained over rest of the current fiscal year, traders and producing company officials have told SteelOrbis.
The traders and company officials said that, while local base HRC prices have remained at INR 47,500-48,000/mt ($644-651/mt) ex-works, trading activity has fallen slightly, which was largely attributed to market participants taking a pause as prices had risen too fast in too short a time and wanted to assess their stock levels.
Traders and officials in producing companies said that reports of premiums seen in the previous week have been few in recent trading days, but they were quick to add that this was not a signal of any imminent price correction setting in as prices will continue to be driven by strong demand and indications of further price increases by producers.
“Restoration of activities have taken place and steel has seen a V-shaped recovery. The demand surge has seen prices go beyond 2018 high levels. There is an increase in demand in international markets too. Iron ore prices are rising, impacting international markets too. Indian prices cannot be insulated from that,” Soma Mondal, commercial director of Steel Authority of India Limited (SAIL), said.
In addition, two Mumbai-based traders have said that the market is anticipating another round of base price increases before the end of the current month of around INR 2,000/mt ($27/mt). They pointed out that, even though SAIL is citing a rise in iron ore prices to justify higher prices, integrated steel mills like SAIL with captive iron ore mines are actually insulated from rising raw material prices in a significant way, and are attempting to maintain the upward movement of base prices largely to keep increasing their margin realizations and earnings.
And in anticipation of such an uptrend in prices being sustained, the present lull in the market will soon be replaced by end-users and market intermediaries starting to restock before the year-end, they added.
$1 = INR 73.70