Local Indian hot rolled coil (HRC) prices have climbed to a historical peak during the past week, with more steel mills hiking base prices for the second time in the current month, reacting to rising energy costs, SteelOrbis learned from trade and industry circles on Monday, October 25.
Local traded prices have increased to INR 73,000-74,000/mt ($975-988/mt) ex-Mumbai, increasing strongly by INR 2,000-3,000/mt ($27-40/mt) over the past week, reacting to base price increases by mills and strong demand.
Following the lead taken by Steel Authority of India Limited (SAIL) early in the month when it increased its base price by INR 750/mt ($10/mt), Tata Steel also pushed up its base price by INR 750/mt ($10/mt), JSW Limited by INR 1,000/mt ($13/mt) and ArcelorMittal Nippon Steel Limited (AMNS) raised its base price by a similar amount of INR 1,000/mt ($13/mt).
The effective HRC base prices of mills have thus been pushed up to the range of INR 68,500-70,000/mt ($915-935/mt) ex-works, sources at mills said.
“The landed price of coking coal is currently averaging at $430/mt CFR, from the level of $110/mt CFR early in the year. Even following the second base price increase, prices need to move up by at least INR 2,000-3,000/mt ($26-40/mt) to offset the current high levels of energy costs,” sources at JSW Limited said.
Against this backdrop, the market expects another base price revision by at least INR 2,000/mt ($26/mt) in early November, triggering rapid restocking by market intermediaries and fresh bookings by end-users, pushing local HRC prices to a new high.
“By all indications, the market seems to be absorbing the rise in HRC prices from higher energy costs. Most significantly higher prices are being absorbed, stocks are moving fast from mills to the market, and inventories are on the lower side even though export shipments have fallen to very low levels as sellers are not willing to accept the low valuations of Asian buyers. This in turn reflects strong domestic market conditions,” a steel sector analyst at a Mumbai-based financial services firm said.
$1 = INR 74.90