Indian steel mills have announced a second price hike by around INR 1,500-2,000/t ($20-27) for Dec ’20. Prices have been increased on the back of lower inventories and robust buying in trade segment.
Effective prices by major steel mills after 2nd increase:
- JSW Steel- HRC stands at INR 49,400/t and CRC at INR 58,400/t (exy-Mumbai).
- AM/NS India – HRC stands at around INR 49,000-49,150/t and CRC at INR 58,250/t (exy-Mumbai).
- Govt owned SAIL has raised list prices today by INR 1,500/t. However, revised offers could not be released till the time of publishing.
Earlier this month, mills had raised list prices of HRC and CRC by INR 2,000/t due to a steep hike in iron ore prices and robust demand from auto, white and yellow goods.
Prices in the trade segment-
- HRC (IS2062 2.5-8mm) stands at INR 50,000-52,000/t (exy- Mumbai), INR 52,000- 52,500/t (exy-Delhi),INR 50,000-52,000/t (exy- Chennai).
- CRC (0.9 mm GR) is around INR INR 59,000-61,000/t (exy-Mumbai) and INR 60,000- 62,000/t (exy-Delhi) and INR 60,000- 61,000/t (exy-Chennai).
- Prices do not include GST @18%
Widening gap between mills’ offer and trade segment prices – Amid increased trades on robust buying, there is a difference of around INR 2,000/t between the trade price and offers from mills.
The gap between mill price and the market price is due to the following reasons:
1.Supply tightness: Major steel mills are pushing prices on tight supply since they are working with limited inventories. Thus mills are unable to provide sufficient stocks to the trade sectors. “Mills are supplying only 30% of MoU quantities because of shortage”, shared a major stockiest based in Faridabad region. Meanwhile, another major distributor from Mumbai shared that “there is more room for further hike in flat steel prices since the gap between mill price and trade price has widened”.
2.Improved buying – Traders are rigorously buying the material and trying to hoard the stocks amid a rapid increase in domestic flat steel prices. Most of the vendors are booked till March. Also, OEMs are complaining about the low delivery of material. Thus the shortage and panic sales lead to differences between the prices.
3.Absence of imports- Traders and stockiest are unable to book imported HRC from South Korea or Japan amid higher global prices. Thus imports are not viable at the moment. Also, it will take two months to be delivered to India. Thus traders have no other option besides raising prices in the domestic market. Japanese and Korean mills are targeting $690/t CFR SE Asian levels, up by $30 w-o-w.
Mills up for 3rd hike in Dec’20 – Major steel mills are eyeing the third hike in Dec’20 by around INR 1,000-1,500/t since the current hike is absorbed in the domestic market. Also domestic prices likely to remain strong for the next two months on active trades, market sources shared.
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