Local Indian local hot rolled coil (HRC) base prices have remained at higher levels and are expected to rise further for December amid brisk trading of high volumes, which has pushed up tradable prices on a par with base prices, while all volume-based discounts have been withdrawn by integrated steel mills, sources told SteelOrbis on Monday, November 30.
Some reports in the market indicated that some smaller-volume buyers have even had to pay a premium to confirm bookings.
The base and tradable prices have been quoted in the range of INR 45,000-45,500/mt ($608-615/mt) ex-works and dealers and end-users were seen to be aggressively restocking, anticipating that producers will leverage shortages in supplies to the market in order to hike base prices for December deliveries. Tradable prices were at INR 43,500-44,500/mt last week.
Market sources said that integrated steel mills are expected to start announcing higher base prices, with buyers expecting the quantum of the increase to be at least INR 1,000/mt ($14/mt) for December deliveries.
The sources said that, in several regions like north and west, buyers were reported to have been paying premium ranging around INR 2,000/mt ($28/mt) to get confirmed bookings, taking the tradable price to around INR 47,000/mt ($635/mt).
A number of market participants said that government circles were talking of effecting an across-the-board hike in import duty on flat products. Even though the landed price of ex-S. Korean HRC is still significantly higher than domestic prices at around $630-640/mt CFR Mumbai and inward shipment volumes are negligible, higher import duty would offer greater protection to local producers, offering the latter headroom to hike local base prices.
“The overall demand revival and average industry inventory levels estimated to be less than 15 days’ production equivalent are driving prices. But margins for producers are not seeing significant improvements as input costs of iron ore and power are escalating,” a steel sector analyst with a Mumbai-based financial advisory services firm said.
$1 = INR 74.00
