Local Indian hot rolled coil (HRC) trade-level prices have showed improvements over the past week driven by expectations of restocking with the monsoon lean season to end in the coming weeks and the landed price of imports moving up and hence easing competition, though local supplies continue to remain on higher side, SteelOrbis learned from trade and industry circles on Monday, August 18.
Sources said that HRC trade prices have gained a healthy INR 800/mt ($9/mt) to INR 50,000/mt ($572/mt) ex-Mumbai and are up INR 400/mt ($5/mt) to INR 51,600/mt ($591/mt) ex-Chennai in the south.
According to the sources, even though trade volumes have remained on the lower side, sentiments have been improving with market intermediaries expecting a sharp rise in restocking from distributors and end-users as the monsoon season nears its end in another few weeks and with festive season demand improvements prompting industrials like consumer durables to conclude fresh raw material bookings. Also, the changed global flat product pricing has had a fallout in pushing up the landed price of imports of ex-China and ex-Japan HRC above the local trade-level prices after adding the safeguard levy.
According to calculations shared by leading local distributors, the basic import price of HRC works out at $510/mt CFR for ex-Japan and $525/mt CFR for ex-China shipments. The base price after adding basic customs duty and cess works out at $570/mt CFR in the case of ex-China shipments, while the ex-Japan price remains unchanged at $510/mt CFR as it does not attract any customs duty as per the India-Japan FTA.
Since these ex-China and ex-Japan prices are below the threshold price of $675/mt, they will attract the 12 percent safeguard duty plus 1.2 percent cess and the effective end-price for an importer would be higher than the current local trade-level price.
A section of distributors claimed that the final price of imports therefore works out at INR 58,300/mt ($667/mt) ex-China and INR 52,500/mt ($601/mt) ex-Japan.
“If current trends on global prices are maintained, then the landed price of imports will continue higher than local prices and provide headroom for HRC prices, trade and mills’ listed prices, to edge up further. However, our assessment is that the impact of lower import competition will be to some extent offset by the higher volumes being pushed into the market by producers,” a Mumbai-based distributor told SteelOrbis.
“The overall interplay of lower import competition and higher local supplies and its impact on the trade price will be clearer as the current lean season gives way to the busy season and the extent of the demand uptick,” he added.
$1 = INR 87.45