Large Indian steel mills, except one, have increased flat product base prices for May deliveries, citing a rise in the costs of raw materials and energy, SteelOrbis has learned from company sources.
The mills going in for a price revision increased flat product prices by INR 1,000/mt ($11/mt) across the board. However, one large mill refrained from any immediate price increases. According to an official at this company, “Increasing base price at a time of slowdown in stock movement and demand weakness is always a difficult call. As per our assessment and operational viability, we will absorb higher input costs, as of now. But this can change very fast depending on how costs behave in the short term.”
Following the revision announced by the mills, effective base prices for hot rolled coil (HRC) now stand in the range of INR 59,200-62,000/mt ($627-656/mt) while the effective prices for cold rolled coil are now in the range of INR 66,500-69,000/mt ($699-730/mt).
According to a steel sector analyst at a Mumbai-based financial advisory firm, the hike in base prices will impact trade volumes at a time when industrial demand is weakening. However, he said that some negative impact will be mitigated by the fact that the current landed price of imported flat products from non-FTA countries is higher than local prices.
It was pointed out that, because of the depreciation of the rupee and the recent rise seen in logistical and handling costs, the import flat product landed price is about INR 7,000/mt ($74/mt) higher than domestic prices. This offers the mills some slight leeway in passing on higher input costs to consumers through the latest round of base price hikes.
