Indian mills announce the fourth hike in flat steel prices by $34/t in Dec ’20

Indian steel producers announced the fourth consecutive hike this month by around INR 1,500-2,500/t ($20-34). Price rally in the international market coupled with robust demand from consumer durables and auto segments contributed to the continuous increase in steel prices.

Effective list prices of mills-

• SAIL- the revised prices stand at INR 51,500-52,000/t for HRC and INR 60,100/t (exy-Mumbai) for CRC.
• AM/NS India- after revision HRC price stands at INR 51,600-51,700/t and CRC at 62,200-62,300/t (exy-Mumbai).
• JSW Steel- offers of HRC are at INR 51,500-52,000/t and CRC at INR 61,500-62,000/t (exy-Mumbai).

It may be recalled that the first hike was made by around INR 2,000/t, the second hike by INR 1,000-1,500/t, and the third hike by INR 1,000-1,500/t in the month of Dec ’20.

SteelMint insight on the factors behind the recent spurt in prices-

1. Tight supplies- Steel mills are supplying 30-40% less as compared to quantities mentioned in MOU. Meanwhile, mills are delaying the supplies due to scarcity. “A major steel manufacturer is supplying 25% less than the quantity mentioned in MOU”, shared an important distributor in the Chennai region. Because of limited supplies, the gap between the trade price and mill price widens and leads to a steep hike in domestic prices.

2. Robust demand from the consumer durable sector– Festive sales and work from home concept have resulted in robust demand in the consumer durables sector. Thus, companies are increasing consumer durable product prices by 6-20% on the back of healthy demand. Also, import restrictions, coupled with the freight issues and delays in port clearances for some imported products, have led to a supply issue, SteelMint learned from recent market reports.

3. Higher export offers- An upside in global HRC offer from major exporting nations has provided enough headroom for Indian mills to increase domestic steel prices rapidly. Currently, Indian mills are offering around $750-760/t CFR for Vietnam markets and around $800/t CFR for European markets.

Prices in the trade segment-

• HRC (IS2062 2.5-8mm) stood at INR 54,000-55,000/t (exy- Mumbai), INR 54,500- 55,500/t (exy-Delhi), and INR 54,000-56,000/t (exy- Chennai).
• CRC (0.9 mm GR) is around INR 62,000-64,000/t (exy-Mumbai), INR 62,000- 65,000/t (exy-Delhi), and INR 65,500- 67,000/t (exy-Chennai).
• Prices do not include GST @18%

Will this price trend continue in Jan ’21?

Demand supply mismatch and increase in global prices shall continue to keep domestic flat steel prices strong in Jan ’21. Also, higher raw material costs are likely to keep flat steel prices supported.