The rally in local Indian hot rolled coil (HRC) trade prices has gained momentum from strong export order bookings by Indian mills, the resultant dip in volumes available for domestic sales, positive end-user demand, and imminent base price increases by producers, SteelOrbis learned from trade and industry circles on Monday, January 30.
Indian HRC trade prices have surged by INR 1,800/mt ($22/mt) to INR 59,700/mt ($733/mt) ex-Mumbai and are up INR 1,000/mt ($12/mt) to INR 58,500/mt ($718/mt) ex-Chennai in the south.
According to a steel sector analyst with a Mumbai-based financial advisory firm, a base price increase across flat product segments of around INR 2,000/mt ($24/mt) by mills is almost a certainty in market circles.
He said that, while definitive figures are not readily available, industry circles roughly estimate that mills have increased export allocations, particularly in the flat product portfolio by a range of 20-30 percent for the last quarter and with plants already operating at higher levels, while the availability of products for local merchant sales has been dipping week on week.
However, at least two traders cautioned that the headroom for further gains in local prices is becoming limited. They pointed out that the landed price of ex-Japan and ex-South Korea HRC is close to INR 60,000/mt ($736/mt) and that the current domestic price is already close to it and any further increase would entail demand sourcing shifting towards imports.
But they conceded that the dynamics of local pricing vis-à-vis import competition could change if the government accedes to aggressive moves by local mills seeking import tariff protection in form of safeguard duties for inclusion in the forthcoming national budget to be placed before parliament on Wednesday.
$1 = INR 81.50
