Large Indian integrated steel mills have said they have hiked flat product base prices for September, riding on expectations of a demand revival in key user segments following the government’s reform of the indirect tax regime - the Goods and Services Tax (GST). However, it seems some of the increase is just compared to the latest tradable price levels, which were already at a low level for the past month, while the base price compared to the levels voiced by producers in early August seem almost similar, SteelOrbis learned from various sources.
Following the revisions in listed prices, hot rolled coil (HRC) listed prices now range at INR 50,000-52,000/mt ($568-591/mt) ex-works, which is nominally up from tradable levels at INR 49,000/mt ($556/mt) ex-Mumbai, and at INR 51,000/mt ($579/mt) ex-Chennai reported early this week. As compared to the base HRC price seen in early August - INR 50,400-51,800/mt ($574-590/mt) ex-mill - the price has posted an insignificant change.
Even though the GST on steel products has been kept unchanged at 18 percent after reform of the GST tax structure, steel producers expect that the lowering of the rate from 28 percent to 18 percent in the case of a large segment of passenger cars coupled with the lowering of the rate on cement used in construction will drive derived demand for steel across key sectors, enabling higher prices to be absorbed by the market.
Furthermore, the landed price of imported flat products continue to remain slightly above domestic prices, which also offered local producers headroom to increase September prices.
