Indian flat steel producers, led by two large integrated mills, have commenced announcing base price hikes, citing rising energy costs, a surge in landed prices of imported raw materials, and logistical disruptions, SteelOrbis learned from company sources on Wednesday, March 25. Meanwhile, other large and medium-scale mills are expected to follow suit and announce higher base prices before this weekend.
Sources said that the third base price revision this month has been largely attributed by mills to supply chain disruptions caused by the war in the Middle East, as well as government regulation of natural gas supplies to industrial users.
According to the sources, in the latest round of increases, base prices for hot rolled coil (HRC) and cold rolled coils (CRC) have been hiked by INR 750/mt ($8/mt) and INR 1,500/mt ($16/mt), respectively. Following this, the effective listed price of HRC now stands at INR 56,100-58,250/mt ($597-620/mt) and that of CRC is in the range of INR 63,500-66,350/mt ($695-706/mt).
“Steel companies are facing disruptions, leading to serious operational instability. Global suppliers are defaulting in delivery of critical coking coal and liquefied natural gas (LNG). Domestic energy supplies are also being regulated by the government. Our finished steel output has not been affected so far, but costs are rising and we need to protect our margins. Higher costs are only partially being passed onto the consumer through revised prices,” an official at a large mill told SteelOrbis.
“Production cuts are now becoming a distinct possibility if supply chain disruptions continue,” he added.
“The two previous base price hikes this month were absorbed by the market, largely because of tighter supplies attributed to declining inward shipments of imports. But there are risks of high prices triggering a demand depression with a time lag. The energy crisis and shortage of imported inputs is also beginning to hit major steel consuming industries, which in turn will have a cascading impact on overall steel demand,” a Mumbai-based distributor said.
