Local Indian hot rolled coil (HRC) traded prices have come under a slight negative correction over the past week but further price increases are seen to be inevitable as producers will be compelled to hike ex-mill prices to offset the sharp surge in commodity and energy costs following the Russian invasion of Ukraine, SteelOrbis learned from trade and industry circles on Monday, February 28.
Sources said that HRC traded prices have lost INR 600/mt ($8/mt) to INR 66,200/mt ($887/mt) ex-Mumbai and are down INR 800/mt ($11/mt) to INR 65,950/mt ($884/mt) ex-Chennai amid a slight slowdown in sales in the secondary steel market.
However, there appears to be near-unanimity among market participants that mills will be forced to increase base prices in March to pass on the sharp increase in energy costs and commodity prices in general as global markets and trade sees increased disruptions from Russia’s invasion of Ukraine and the imposition of economic sanctions on the former.
“The global uncertainties, rising geopolitical tensions, and tougher sanctions on Russia, will all impact globally-interlinked economies. The cost structure of local manufacturing including steel mills will see drastic changes and steel prices too will be impacted by inflationary pressures,” a Mumbai-based steel distributor said.
“An increase of at least INR 2,000/mt ($27/mt) in HRC base prices is a distinct possibility when mills announce new prices for March deliveries. The slight downward movement seen in the past week is a temporary aberration,” he said.
“The biggest shock we see ahead is in import prices of coking coal. The coking coal price surge will be the single biggest input cost hike that will impact the cost structure of domestic steel mills,” an official at a private mill said.
“We also apprehend some disruptions in cross-border movement of payments and delays in outward remittance for import payments and inward remittance against exports, all of which adds to the cost of operation,” he said.
