Local Indian hot rolled coil (HRC) prices have remained stable during the past week, taking a break from an eight consecutive week-uptrend, even as the market is getting ready for an expected unprecedented base price hike by domestic integrated steel mills, SteelOrbis has learned on Monday, August 31.
Market sources said that local HRC prices have remained stable at a one-year peak of INR 41,800-42,300/mt ($562-569/mt) ex-works, but trading activity has become dull with buyers having completed short-term restocking and wary of concluding large deals at higher prices.
However, despite the low trading activity, several market reports have indicated that local steel mills are getting ready to effect one of the highest base price increases for September deliveries, with a section of the market expecting flat product base price hikes to be as much as INR 2,000-3,000/mt ($27-40/mt) ex-works.
Sources said that steel mills are citing high input costs, particularly those of locally sourced iron ore in the case of producers without captive mines, as a reason to hike base prices. However, several traders and sources pointed out that strong domestic demand, rising steadily since the national lockdown was progressively being eased, and the emergence of pent-up demand will be leveraged by producers to increase per ton margin realizations.
At least two traders pointed out that the size of the sharp increase in flat product prices being contemplated by local steel mills - INR 2,000-3,000/mt ($27-40/mt) in a single month - could be compared with the increase in price of INR 3,000/mt ($40/mt) effected through the entire April-June first quarter of 2020-21.
According to an official at JSW Steel, demand and average monthly sales in August this year are almost on a par with pre-Covid levels and there is still headroom for prices to seek higher levels.
$1 =74.40
