Local Indian hot rolled coil (HRC) prices have continued their consolidation at higher levels for the eighth consecutive week, gaining INR 500/mt ($7/mt) week on week to INR 39,250/mt ($549/mt) ex-works amid heavy restocking across end-users and market intermediaries ahead of anticipated base price revisions by domestic steel mills over the next few weeks and expectations of a fiscal stimulus by the government in its forthcoming national budget, SteelOrbis learned on Monday, January 27.
According to traders, low inventories across market segments, rising input costs and improving sentiments among actual users will prompt domestic steel mills to increase base prices over the next couple of weeks, with the market expecting the increase to be in the range of INR 500-1,000/mt ($7-14/mt).
“Local steel mills will definitely increase base HRC prices to pass on the higher price of iron ore. State miner NMDC Limited has increased prices for high grade iron ore lumps twice in January and private miners in Odisha have increased prices by 5-10 percent over the past three weeks. Steel mills without captive mines will be the first off the blocks to revise base HRC prices,” a Mumbai-based trader said.
“The steel mills have also got back some of their pricing power, having lowered inventories by 25-35 percent since November and aligning production in line with soft demand,” the trader added.
However, at least two market sources said that the overall supply volume in India is also gradually increasing. In particular, ArcelorMittal Nippon Steel (AMNS), which has taken over the erstwhile Essar Steel, has been actively offering in the domestic market, while slowing its export sales. Partly, this is connected with better local prices, but partly with the new policy in the international market, which will be more similar to Tata Steel’s position. It is expected that AMNS will stop HRC shipments to the European Union (EU), where ArcelorMittal operates steel mills, and a shift of its focus to local supplies could divert at least 40,000 of HRC per month from the EU to India. “Most major steel mills in India are not keen to export firstly because of the price,” a trader said, adding that sales to Vietnam have also slowed recently.
$1 = INR 71.50