Local Indian hot rolled coil (HRC) prices have continued to strengthen for the third consecutive week, gaining INR 500-700/mt ($7-9/mt) week on week to INR 39,300-39,500/mt ($523-526/mt) ex-works as some integrated steel mills have continued to hike base prices, SteelOrbis learned on Monday, July 20.
According to market sources, state-run Steel Authority of India Limited (SAIL) has increased its base price by INR 700/mt ($9/mt) during the past week, with market intermediaries saying that more producers are expected to follow suit before the end of this month in their attempt to maximize realizations and in anticipation of the green shoots of a manufacturing sector revival.
However, at least two traders and an analyst at a financial services firm have pointed out that producers are being ‘too aggressive’ in pushing up prices. They said that, though there have been some signs of key user industries normalizing operations and though demand has improved, it is ‘still very fragile’ and the market is not in a position to pass on higher prices down the consumption chain.
They pointed out that more steel mills have been increasing plant capacity utilizations with the industry average at around 85-90 percent and this would cause oversupply in the market, which in turn would bring fresh pressures on prices and a correction in current HRC prices.
However, “we do not think that there is much downside risk to prices from current levels as local industry is increasing the pace of normalization. And domestic demand is just one element in our pricing. Ex-India export prices are gaining ground and we also have to keep aligning local base prices accordingly, also due to rising input costs, particularly those of fuel and energy,” an official at SAIL said.
$1 = INR 75.10