India: Restocking lifts domestic HRC price ahead mills’ hike announcement for Dec

Domestic HRC & CRC prices in India’s trade segment have increased by INR 500-1000/t w-o-w on the back of an anticipated hike by Indian steel mills next month. If trade sources are to be believed, mills are likely to announce a price hike of around INR 1,000-2,000/t ($14-27) for Dec’20.

In the month of Nov’20, mills have already announced two rounds of price hike. Last week Indian steel mills had announced a second price hike in Nov’20 by INR 750/t. Towards the beginning of the month, they had raised prices by INR 1,000-1,250/t due to improved auto demand along with short supply hovering in the trade market

Reasons driving flat steel prices – 

1. Improved trades in the domestic market- Traders are making bulk purchases and are restocking heavily on bullish market trends and higher steel prices in upcoming months. Retailers, stockists, and distributors are actively restocking the material in anticipation of a significant price hike in December

2. Supply constraints in HRC- Stockists of Faridabad (northern India) highlighted the shortage of HRC in the domestic market. Sources in Mumbai highlighted tighter availability of thinner gauge HRC. In addition to it, a major steel mill based in eastern India is going for maintenance shutdown for few days in Dec, market sources shared with SteelMint.

3. Widening gap between the trade price and mills’ offer- Major steel mills are offering HRC at INR 44,750-45,000/t exy- Mumbai. However, trade segment prices are currently hovering at INR 46,000- 48,000/t exy- Mumbai. Prices do not include GST @ 18%

4. Absence of imports- Stockists and importers are less interested in importing HRC on higher global prices. Thus traders have to procure the material domestically, leading to a hike in the prices in the domestic market. Global HRC offers have increased by $25-30 w-o-w.

• SteelMint’s assessment of trade reference prices of HRC (IS2062 2.5-8mm) stands at INR 46,000-48,000/t (exy-Mumbai) and INR 46,500- 47,500/t (exy-Chennai).
• SteelMint’s assessment of CRC (0.9 mm GR) price is around INR INR 55,000-56,000t (exy-Mumbai) and INR 56,000-57, 500/t ex-Chennai. Prices do not include GST @18%

Thus the market sentiments are likely to remain supported in the near term, considering mills’ price hike announcement which is expected to be made in a week’s time.