Indian domestic hot rolled coil (HRC) prices have risen by around INR 1,000/mt ($16/mt) over the past week to levels of INR 37,500-38,500/mt ($607-624/mt) ex-works, with several local steel mills increasing prices though a price rollback is now anticipated for later this month, as traders said.
Several traders have told SteelOrbis that large domestic mills led by Essar Steel and JSW Steel have effected across-the-board price increases of around $16 for all flat products during the past week, backed by the weakened Indian currency and marginal competition from imported HRC.
The traders said that other large mills like government-run Rashtriya Ispat Nigam Limited (RINL) and Jindal Steel and Power Limited (JSPL) in the private sector are reportedly considering similar price hikes.
Market sources said that, while the price increases are with immediate effect, demand for HRC has continued to be very low and there has been a sharp fall in fresh bookings as a fallout from the hike in prices.
The sources pointed out that over the past month the landed price differential between imported and domestic HRC has increased from $30/mt to $50-60/mt, and domestic producers have been seizing the opportunity to increase prices to offset the rising cost of imported coking coal caused by the weakening of the rupee.
However, several traders and distributors have told SteelOrbis that the price increase is being strongly resisted by the market in view of sluggish demand which is forecast to slacken further owing to monsoon rains and the slowdown in the manufacturing sectors.
The traders said that reports in the market strongly indicate that domestic mills are already considering a rollback of their price hikes since the higher levels have not been absorbed by the market.
A trader quoting officials at Steel Authority of India Limited (SAIL) that the price hikes were more in the nature of testing the market and that SAIL is observing the price trends before taking a final decision.