Local Indian hot rolled coil (HRC) prices have continued to perform strongly for the fourth straight week, gaining INR 750/mt ($11/mt) week on week to INR 37,000/mt ($519/mt) ex-works in anticipation of base price hike by domestic steel producers in January and supported by the lower inventories of mills, SteelOrbis learned on Monday, December 30.
According to traders, the market is expecting local steel mills to continue increasing base prices right through the remaining months of the current fiscal year, triggering a rush for fresh bookings by market intermediaries and to some extent by end-users.
The market expects the steel mills to go in for at least a INR 2,000/mt ($28/mt) increase in base HRC prices in phases starting in January 2020, to bolster their sales revenues, the traders said.
The base price increase in the local market is supported by strong export bookings received by several large integrated HRC producers and this has eased concerns over risks of a rise in inventory levels from higher local prices.
“Local HRC prices are moving not linked to fundamentals of demand-supply dynamics but more on expectations that the government will increase spending in the forthcoming national budget to be placed before parliament in February in its attempt to reverse sluggish growth and indirectly ramp up steel demand from infrastructure sectors,” a Mumbai-based trader said.
“The current year has been particularly bad with HRC prices falling during 21 of the 52 weeks in the year. Now that prices are moving up, producers feel that the worst might be over. Also, major producers like JSW Limited, Tata Steel and JSPL have all instituted production cuts over the past four to five months, which has somewhat aligned the supply side with demand and supported higher prices,” he added.
$1 = INR 71.30
