Major Indian steel mills are planning to raise HRC and CRC prices by around INR 1000-1500/MT in Jan’20, SteelMint learned from market participants. The price hike is expected owing to a hike in export prices, decent export bookings made to Vietnam, and lower import bookings.
SteelMint, in conversation with market participants, learned that the domestic price hike may be done in two-fold to test the market. Thus few mills are planning to raise offers by INR 500-750/MT in retail markets next week, and the rest INR 1000/MT increase shall be announced in the month of Jan’20. However official announcement on this is still awaited.
1. Increase in Indian HRC export offers to Vietnam- Indian steel mills have recently increased HRC export offers to Vietnam at USD 490-495/MT CFR Vietnam, which was around USD 480-485/MT CFR basis last week. Also, an increased appetite among Vietnamese buyers for Indian origin HRC for the last few months shifted the interest of domestic mills to the export market.
2. Increased dependency on imported HRC in Vietnam on low domestic availability- Vietnam domestic integrated mill Formosa Ha Tinh is also planning to undergo maintenance shutdown in its hot strip mill from 30th Dec’19 to 17th Jan’20. This leads to an increased dependency on imported HRC to Vietnam from India, which in turn pushes Indian HRC export offers on the higher side.
3. Lower HRC export orders from China- Frequent announcement on production cuts in China, in turn, resulted in limited HRC export orders to Vietnam. This, in turn, results in increased export bookings from India to Vietnam.
4. Lower Imports of finish-flat steel to India- Owing to weaker domestic demand in India for the last few months, importers kept themselves away from booking material from FTA nations. Thus Indian flat steel imports in Nov’19 stood at 0.26 MnT decline by 32% M-o-M as compared to 0.38 MnT in Oct’19.
Earlier, SteelMint reported that a prominent eastern Indian steel mill witnessed maintenance shutdown at its blast furnace for one week in Nov’19. Also, another major steel mill based in western India witnessed maintenance shutdown in its CRM mill- 1 & 2 for 3 to 4 months.
This may provide enough motivation for Indian steel mills to raise HRC prices in the domestic market. However, few of them remain skeptical about a further increase in HRC prices over demand stability in the domestic market. This week SteelMint’s trade reference price for HRC (2.5-8mm, IS2062) continues to hover at INR 35,500-36,000/MT (ex-Mumbai), and INR 35,500-36,500/MT (ex-Delhi). Prices mentioned above are basic, and extra GST@ 18% will be applicable.
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