Local Indian hot rolled coil (HRC) prices have continued to consolidate at higher levels for the third consecutive week, gaining INR 250/mt ($4/mt) to INR 36,250/mt ($510/mt) ex-works on market expectations of domestic steel mills resorting to another base price hike this month or early January, traders said on Monday, December 23.
According to traders, market expectations are that, as the current fiscal year draws to a close, domestic steel producers are likely to go in for multiple revisions of base price to maximize sales margins and bolster balance sheets and the next HRC base price hike could happen as soon as over the next two weeks, after an increase earlier this month.
“The uptrend in local HRC prices seen over the past several weeks has entirely been driven by the pricing power of domestic steel mills and not demand driven as evident in low trading volumes in the market,” a Mumbai-based trader said.
“Producers are banking on expectations of higher government spending in the forthcoming national budget to be placed before parliament in February and relatively lower imports to support higher HRC prices,” he added.
Sources said that the forthcoming base price hike by steel mills within the next two weeks could be around INR 1,000/mt ($14/mt).
According to an analyst with a Mumbai-based financial services firm, local steel producers have been lowering production over the past few months, indicated by the 2.8 percent fall in steel output in November, and this supply-side restriction will bring some balance to the market and support higher prices.
$1 = INR 71.14
