Indian steel mills have announced a steep hike in list prices of HRC and CRC prices for Oct deliveries. Prices have increased by INR 1,000-2,500/t ($14-34). Price hike in CRC is higher compared to HRC. Tight supply & robust demand from the auto sector compelled mills to raise domestic prices.
- JSW Steel’s HRC price now stands at INR 43,150/t and CRC at INR 52,150 (exy-Mum).
- AM/NS India revised offers of HRC are at around INR 43,250/t and CRC at INR 51,000 (exy-Mum).
- JSPL has also raised HRC prices by INR 2000/t and is offering around INR 43,000/t (exy-Mumbai).
- Price do not include GST extra @18%
Meanwhile, the government owned SAIL and other major Tata Steel are likely to follow suit. In the month of Sep’20 major steel mills had increased HRC and CRC prices twice, except for SAIL raised CRC prices thrice in Sep’20
Factors driving steep hike in HRC & CRC prices
1.Supply shortage- Backlog in export orders and shortage of thinner gauge HRC provides enough scope for mills to raise prices in the domestic market. Trade sources shared with SteelMint that supplies may continue to remain low by 25-30% compared to Sep deliveries.
2. Major steel mills undergoing maintenance shutdown – Meanwhile, the CRCA mill 1 in JSW Vijayanagar plant will be operational from Nov or Dec, thus supplies are likely to remain tight near term. Meanwhile, SAIL Bokaro steel plant is facing some issues in its CRM mill for the last few days leading to further hike in prices, SteelMint learned from its trade channels.
3.Absence of imports- The market has not been strong for the last few days in HRC however there is a hard option to procure import material. Thus, traders have to accept higher prices from integrated steel mills. Higher global prices and frequent lockdown resulted in the absence of imports in the country which in turn drove domestic prices. As per data maintained with SteelMint Indian flat steel imports stood at 0.09 mn t in Aug which was around 0.22 mn t in Jul ’20.
4.Robust demand in auto – Maruti Suzuki India Limited (MSIL), India’s largest car seller, has reported 30.8% (y-o-y) growth in its Sep sales at 160,442 units against 122,640 units in Sep’19. Hero MotoCorp – the world’s largest manufacturer of motorcycles and scooters – registered record sales of 715,718 units on Sep’ 20, its highest sales in a single month in the calendar year of 2020. Meanwhile, Original Equipment Manufacturers (OEM’s) have been heard to be restocking. Also, demand for tractors seems to rise this festive season along with the passenger vehicles.
On the other hand, SteelMint’s benchmark price for HRC (IS2062 2.5-8mm) stood at INR 41,000-42,250/t and CRC (0.9 mm GR) is around INR INR 50,500-51,500/t (exy-Mumbai). Prices do not include GST extra @18%. An effective hike will be passed on to traders market shortly.
Will this hike sustain in the market?
Market participants shared that HRC prices may soften after a few days on low buying. However, demand in CRC is expected to remain robust due to improved demand in the auto with the arrival of the festive season. This may widen the spreads between HRC and CRC in the upcoming month.
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