Local Indian hot rolled coil (HRC) prices have continued to move up over the past week, touching a 28-month peak, in reaction to base price hikes announced by mills and rapid restocking seen in trade channels anticipating a supply tightening due to lower imports amid prolonged geopolitical tensions, SteelOrbis learned from trade and industry circles on Monday, March 23.
Sources said that trade-level HRC prices are up INR 2,000/mt ($21/mt) to INR 55,000/mt ($586/mt) ex-Mumbai and have gained INR 1,000/mt ($11/mt) to INR 57,200/mt ($610/mt) ex-Chennai in the south.
According to the sources, large players in trade have increased restocking significantly, anticipating supplies tightening amid declining imports attributed to disruptions in global supplies. This, the sources said, has enabled the market to easily absorb the base price increases announced by mills last week.
At the same time, another round of base price increases in the coming weeks remains a distinct possibility, as energy supply disruptions and shortages continue to deepen with the prolonged conflict in the Middle East, leaving steel mills with unrecovered costs. Market insiders expect the next base price hike to be around INR 1,000-1,500/mt ($11-16/mt) based on the current situation on the energy front.
“The market is very bullish as prices will remain on an upward trajectory, primarily driven by cost inflation and tighter supplies as import options are diminished by the war. There is of course not much change in the demand profile overall,” a Mumbai-based distributor told SteelOrbis.
“In the short term, the market can be expected to absorb higher prices. But energy-driven, cost-driven inflationary pressures will risk a demand depression if geopolitical volatility is prolonged,” he added.
$1 = INR 93.48
