Prices in the local Indian hot rolled coil (HRC) market have surged by 1.500/mt during the past week to INR 45,000/mt ex-works, as local steel mills have commenced increasing base price and expectations of sharp rise in government infrastructure spending, traders said on Monday, February 5.
Sources said that large mills including JSW Limited announced a hike in HRC base price by INR 1,500/mt during the past week for February deliveries as expected by the market and other large and medium scale mills are also expected to follow suit over the next few days.
“The higher government allocation on infrastructure investments envisaged in the national budget presented to Parliament on February 01 and government’s renewed emphasis on curtailing finished steel imports is expected to bolster demand,” a Mumbai based trader said.
“Under such circumstances, local steel mills are going in for aggressive increases in HRC base price to offset input cost increases and improve realizations,” he added.
Sources pointed out that over the past six months, local HRC prices have increased by almost INR 7,000/mt and considering expected demand push and protectionist measures from the government to local steel mills, the market is not ruling out a second round of base price hike, toward close of current month.
The sources said that local steel mills are likely to increase frequency of price revisions considering current fiscal coming to close on March 31 and mills’ strategy to improve margin realizations while closing the books.
$1 = INR 64.07