Local Indian hot rolled coil (HRC) base prices have remained stable during the past week, but assessed tradable prices in select regions such as around Mumbai in the west have been reported at higher levels, with the market factoring in the targeted price rise during the current month by producers, sources have told SteelOrbis on Monday, January 11.
They said that integrated steel mills have maintained base prices at INR 52,500-53,500/mt ($717-730/mt) ex-works, after an increase at the start of the year. But the ex-Mumbai traded price has been reported at around INR 55,500-56,000/mt ($758-765/mt) ex-works, higher than INR 55,000/mt ($751/mt) in the earlier week.
It was pointed out that the traded price will continue to seek higher levels in view of buyers (end-users and standalone rolling mills) facing challenges in securing bookings of desired volumes. Also, integrated steel mills have already set a targeted base price hike of INR 6,000/mt ($82/mt) for January, of which only around INR 1,500/mt ($20/mt) has been effective over the past week, and higher hikes are still to come over the next few weeks, leading to higher traded prices amid high demand in regional markets such as the region around Mumbai.
However, sources said that only large end-users have been active in concluding higher-volume bookings from sellers, while users in small and medium-scale industries have still been deferring entering the market, anticipating a government intervention to cool down prices.
“Consumption of flat products during November-December increased by levels of 7-8 percent on month-on-month basis, but was still about two percent lower on year-on-year basis. Short supplies from producers will continue to keep demand in the market in a strong positive zone, giving producers headroom to keep increasing prices,” a steel sector analyst with a Mumbai-based financial services advisory firm said.
“At the same time, a counter-intuitive explanation of the current market dynamics reveals that the rate of price increase by producers may not be sustained as end-users faced with a sharp rise in input costs (HRC) could defer their raw material consumption and restocking and check the rate of the price increase,” he added.
$1 = INR 73.24