Local Indian hot rolled coil (HRC) traded prices have recorded gains over the past week, reversing extended losses amid improved restocking by intermediaries in northern and western regional markets and speculation regarding possible base price increases by mills, SteelOrbis learned from trade and industry circles on Monday, October 4.
The traded prices gained INR 500-1,000/mt ($7-14/mt) to INR 65,200-66,700/mt ($883-904/mt) ex-Mumbai, with dealers resuming restocking, anticipating base price increases.
Integrated steel mills have maintained base prices at INR 67,000/mt ($908/mt) ex-works and slightly above: however, heavy discounting heard last week was withdrawn by most mills. While there was no unanimity in the market, a section felt that producers would go in for marginal base price increases of around INR 1,000/mt ($14/mt), but at least two traders said that, having withdrawn deep discounting to confirm bookings, mills would maintain prices, at least in October, a month with festival holidays in several parts of the country and lower business activity.
Indicating differing views on prices, some steel mills are already talking of a much larger price increase potential in view of rising coking coal prices.
For example, Jindal Steel and Power Limited said that, while prices were down INR 1,500-2,000/mt ($20-27/mt) in September, they started to firm up in October and the trend will continue.
“I am not talking about price hikes or input costs versus realizations. But the fact is that prices of steel-making consumables like coking coal and graphite electrodes have gone up, impacting costs by about INR 10,000/mt ($135/mt). Therefore, there is net potential or headroom to increase prices by INR 8,000/mt ($108/mt) just to meet input cost increases,” JSPL managing director V R Sharma said.
“Local HRC prices have fallen under their historical low over the past two months. But market dynamics remain positive. For one, local prices are still INR 4,000-5,000/mt ($54-68/mt) below the landed price of imports. Exports continue to be robust at 6.40 million mt in April-August 2021, up 13 percent over the corresponding period of the previous year,” a steel sector analyst with a financial services advisory firm said.
“Demand is very near pre-Covid times. We assess domestic steel demand in 2021 to be around 104 million mt, or just two percent below 2019, the year before the pandemic. Our assessment is based on the fact that domestic steel consumption in the first five months of the current fiscal year is about 40.84 million mt, up 43 percent over the corresponding months of the previous year. Hence, the current market offers enough tailwinds for prices to bounce back to historical highs over the next two quarters,” he added.
$1 = INR 73.80