Local Indian hot rolled coil (HRC) trade prices have rallied further on the back of the tightening of supplies from mills, following increased export allocations and the opening up of a window for a third round of base price increases in less than 30 days, SteelOrbis learned from trade and industry circles on Monday, January 23.
Indian HRC trade prices are up INR 600/mt ($7/mt) to INR 57,900/mt ($714/mt) ex-Mumbai and have gained INR 1,000/mt ($12/mt) to INR 57,400/mt ($708/mt) ex-Chennai in the south.
Sources pointed out that import competition in the market has been negligible, with ex-China offers having dried up in recent weeks ahead of the holidays and with mills planning to push up prices. Russian suppliers have also focused on closer sales destinations, while Japanese and South Korean sellers have been eyeing further increases in February and have not been in a rush to push volumes. The lack of import competition and relatively lower local sales inventories have laid down the ground for another base price increase in the coming weeks.
The sources cited the example of mills increasing coated flat product prices by INR 1,000/mt ($12/mt) over the past week as an indication of an imminent increase across all the flat product range.
“Most mills are reporting strong export bookings. Hence, even with local demand remaining almost stagnant, producers are well placed to continue increasing base prices with the next increase at least around INR 1,500/mt ($18/mt),” a Mumbai-based distributor said.
“But trade channels are somewhat cautious in committing fresh bookings as the market might be moving up too fast too soon and a small correction cannot be ruled out. At the same time, all eyes are on the national budget to be placed before parliament on February 1 and favourable government policy initiatives on the macroeconomic front can trigger the next round of market rally,” he said.
However, an official at a private mill maintained a more cautious stance. “There are revival sentiments in key markets like China. But worries over stubborn inflation remains in several geographies, which will ensure marginal growth in the last quarter and the upside potential in the next fiscal year is limited.”
In January, Indian mills have already managed to make two base price increases with the second one by INR 1,000-1,250/mt ($12-15/mt), bringing the level to INR 56,750-57,250/mt ($700-706/mt). After the recent trade price increase, the base price is lagging slightly behind, which again signals a possible further hike in base prices by mills.
$1 = INR 81.10