Indian domestic HRC prices hit over 1.5-years high

• Indian steel mills raised list prices by INR 1,000-2,500/t for Oct
• Supply shortage in CRC continues to persist
• Demand recovery in the auto and white goods sector

India’s domestic hot-rolled coil prices have increased to over 1.5 years after mills announced sharp price hike for Oct’20.SteelMint’s benchmark assessment for commercial-grade HRC currently stands at INR 42,000-43,500/t exy Mumbai. Similar price levels were last seen in Jan’19.

Indian mills raised list prices of HRC & CRC for Oct- Recently all integrated steel mills have announced a steep hike in list prices of HRC and CRC prices on 1st Oct’20 by INR 1,000-2,500/t ($14-34) for Oct deliveries. In the month of Sep’20 steel mills have announced a hike in HRC and CRC prices twice in Sept’20, except SAIL increasing thrice last month.

Mills have raised prices sharply due to:

1. Supply shortage – The CRCA mill in the JSW Vijaynagar plant will be operational from Nov or Dec. Meanwhile, the CRCA mill in SAIL Bokaro steel plant is under maintenance. Meanwhile, Tata BSL is yet to resume its operations completely. Also, SteelMint learned from market sources that a “southern India based plant has reduced its capacity utilization by 30% due to COVID concerns which may further restrict supplies by 20-25% in Oct compared to Sep”. This resulted in a supply crunch and led to a steep hike in the domestic market

2. Absence of imports- Market has not been strong for a few days in HRC however there is no 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.

3. Robust demand in auto sector- 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.

4. Sales in white goods sector to improve further in Q3 FY’21 – According to the market report, sales of washing machines and refrigerators fans, wires, and small appliances, was better in Aug and Sept. Whirlpool has gained market share in refrigerators and maintained its share in washing machines. Washing machines are expected to clock 6.8% growth in the second quarter as demand increased after the easing of lockdown restrictions. Crompton Greaves Consumer, on the other hand, is expected to see double-digit growth in the Sep quarter in the fans category. The expectation is that the sales will pick up during the festive season starting from October,

SteelMint price assessments of key trade markets

• HRC (IS 2062, 2.5 – 8mm) prices are assessed at INR 42,000-43,500/t (exy-Delhi) while INR 43,500-44,500/t (exy-Chennai).
• CRC (0.9 mm IS513 GR) are currently seen at INR 53000-53,500/t (ex-Mumbai),INR 53,000- 54,000/t (exy-Delhi) & INR 51,000- 52,000/t (exy-Chennai).
• Prices do not include GST @18%.

Outlook- Market sources shared with SteelMint that major steel companies will remain largely focused on domestic sales. Tight supplies and festive season are likely to keep market sentiments supported in Oct’20. However, with supplies normalizing, sustainability of higher prices seems skeptical.