India: CRC Price rally Continue; JSW hike Prices

As per industry sources, JSW has announced price hike of INR 500/MT- 750/MT across all its products from beginning of March, 2014. Market was expecting this price hike. JSW personnel were quite cautious on initiating the price hike looking at the current demand scenario. The quantum of price hike has been reduced this time due to lull demand in the economy and falling exports to other countries. Exports for JSW has fallen M-o-M, whereas it has increased Y-o-Y according to sources of JSW. Other primary players are likely to follow the suit.

JSW, which majorly exports its Flat products to countries of Middle East & Europe is now finding an opportunity to take advantage of the domestic market due to shortage of inventory. Export realizations for Flat products stood at USD 565/MT, whereas the domestic prices hovered at around INR 37,000-39,000/MT (Incl ED, VAT extra).

Shortage of CRC

Cold Rolled Steel prices are expected to be revised across trading regions due to shortage of inventory. Cold Rolled product which is a derivative of the Hot Rolled Coils is in short supply in the market. The inventory for Cold Rolled steel products has fallen short by one month and this might be one of the reasons market participants believe that manufacturers might again go for a price revision in the near future.

In Northern markets, many secondary Cold Rolling mills have stopped operation owing to cost overruns. Increased cost of conversion for CRC has forced many secondary players in the market to cut production. However, many market participants believe that non availability of CRC for a long period will bring secondary players back to operation.

Inventory shortage is also felt in other trading regions of South India. As per a trader based in Hyderabad, shortage of inventory has led to sudden rise in prices. CRC (over 0.9) is trading at INR 50,000/MT (Including ED, Vat extra) against the usual trading of INR 47,000/MT (Including ED, Vat extra).  A Traders based in Chennai has recently imported CRC at USD 720/MT.

[su_quote cite=”Senior spokesperson of JSW”]There is inventory shortage for CRC products in the market and we are expecting to revise our prices after observing the demand & supply situation in the market.[/su_quote]

The commissioning of 3 MnT plant of TATA Steel in Jamshedpur will add some inventories in the Market. Manufacturers are closely monitoring the situation in the market and many believe that the price hike may not be absorbed in the market. JSW has produced 3.19 MnT of Crude Steel in Q3 FY14 as compared to 2.09 MnT of crude Steel in Q3 FY13.