Local Indian hot rolled coil (HRC) have continued to consolidate at a higher level for the seventh consecutive week, gaining INR 400/mt ($6/mt) week on week to INR 38,750/mt ($545/mt) ex-works amid sustained restocking by market intermediaries and distinct possibilities of domestic steel mills going in for hefty base price revisions over the next few weeks, SteelOrbis learned on Monday, January 20.
Market sources said that domestic steel mills are most likely to go in for a big base price hike of INR 2,000/mt ($28/mt) over the next few weeks to offset rising input costs like iron ore in the local market and also increase realizations to bolster sales revenues ahead of the end of the fiscal year on March 31.
The expectations of a strong base price increase and prospects of an increase in import duties on flat steel products have triggered hectic fresh bookings by traders and market intermediaries, the sources said.
“Local steel mills have been able to sharply reduce inventories over the previous quarter by an average of 30 percent through a combination of production adjustments, aggressive exports, up seven percent over the last quarter, and this has improved their pricing power. Mills’ inventories are currently at the lowest level in the last 12 months,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“The downtrend in HRC prices seen during most part of 2019 is over as evident from gains in prices over seven weeks and I would expect prices to have a further upside of at least 10-12 percent over the next few months,” he added.
$1 = INR 71.10