The tradable price of local Indian hot rolled coil (HRC) has continued to seek higher levels amid receding threats of import competition and expectations of base price hikes by producers in March, SteelOrbis has learned from trade and industry circles on Monday, March 1.
The sources said that rising flat steel prices in world markets since the resumption of business activity in China after the holiday early in the month negated much of the benefits of lower Indian import duties and, together with freight constraints, even current import bookings will not arrive before two to three months, offering a sufficient window for local producers to increase base prices for March.
It has been pointed out that, though India became a net importer of finished steel in January for the first time in the current fiscal, the arrivals were mostly at a lower contracted price and the increase in ex-China prices since then would temper down import activity to some extent as the benefits of the lower flat rate of 7.5 percent customs duty has been largely negative by higher current valuations of imported HRC.
The plunging Indian rupee which has suffered its highest fall against the dollar in the last 19 months means that the weakness of the local currency would rein in more expensive imports.
Sources said that base HRC prices have been maintained by integrated steel mills at INR 53,500-55,000/mt ($728-749/mt) ex-works. But tradable prices are up to levels of INR 55,000-57,000/mt ($749-776/mt) ex-works. This compares to ex-Mumbai price levels of INR 54,500-56,000/mt ($742-762/mt) traded a week ago.
“There are a lot of positive signals from the Chinese market. This will keep demand and supply in balance and support higher prices. This in turn will enable Indian integrated steel mills to increase HRC prices. The market expects at least another base price revision of INR 1,000/mt ($14/mt) in the near term,” a steel sector analyst with a Mumbai-based financial services company said.
“Overall raw material prices will remain elevated in China and this will reduce margins for Chinese steel mills and provide a floor for steel prices and limit downside risks to global prices. The days of cheap imports are gone and strong domestic demand will drive prices,” an official at JSW Steel Limited said regarding the outlook for local prices.
$1 = INR 73.47
