Local Indian hot rolled coil (HRC) tradable prices have inched up and even stray discounts have been withdrawn in anticipation of base price hikes by producers in July and expectations that demand will gain momentum, SteelOrbis learned from trade and industry circles on Monday, June 28.
Sources said that tradable price in the local market has increased by INR 2,000/mt ($27/mt) to levels of INR 74,000-75,000/mt ($997-1,011/mt) ex-Mumbai, as the market attempts to factor in base price hikes by producers in the coming week of at least INR 3,000/mt ($40/mt) on ex-works basis.
Until now, most integrated mills are reported to be maintaining base prices in the range of INR 69,000-70,000/mt ($930-943/mt) ex-works, the sources said.
“Global steel prices are rallying in the markets of the US and the EU and are expected to sustain their uptrend in the second half of the fiscal year. Chinese steel prices are showing signs of fluctuations in either direction, but our assessment is that they will stabilize at higher levels. Against this backdrop, local producers’ next price target will be $1,000/mt ex-works, considering that the landed price of ex-China imports is still at a 20 percent discount to local prices and that the Indian currency is at an eight-week low against the dollar,” a steel sector analyst with a Mumbai financial services firm said.
“The only headwind to local prices at this time appears to be weak exports in Asian markets. Rising local demand as manufacturing activities gain momentum with the easing of restrictions and higher buying from the EU will enable local producers to de-risk inventory build-ups,” he added.
An official at a private steel mill said that industry plant utilization levels will continue to average at 80-90 percent and crude steel production growth in the current year is expected to be not more than nine percent, which will enable the supply side to support higher prices for the rest of the current fiscal year.
$1= INR 74.20