Major Indian steel manufacturers are planning to raise flat steel prices by up to INR 2,000-3,000/t ($27-41) following bullish trends in the global HRC market. Higher export realizations and absence of imports in near future is likely to cause a steep hike in domestic prices, SteelMint learnt from credible sources.
Why are steel prices holding strong in India?
1. Higher realization in export market- Indian steel mills continued to focus on export market on higher price realizations over domestic sales. Indian mills have sharply raised HRC export offers for Vietnam by around $20-25/t w-o-w on bullish global market trends. Recent offers to Vietnam stood at $810-815/t CFR and to Europe at $900/t CFR for May shipments, sources have reported to SteelMint. Thus, higher realizations in exports are motivating mills to raise prices in the domestic market. Indian mills have managed to book significant volumes of HRC to Vietnam since the beginning of Mar ’21.
2.Imports are not viable- Major exporting nations mainly Japan, China and South Korea have significantly raised HRC export. Major Chinese steel mills are offering HRC at around $765-770/t FoB, meanwhile Japanese and Korean mills are offering at around $790-800/t FoB basis. Thus, imports are not a viable option at the moment for domestic traders.
3. Strong Demand from end user industry- End user industries are pushing for record production to make up for the losses suffered during H1 FY ’21. For instance, Maruti Suzuki, India’s biggest car maker, plans to maintain a daily production run rate of more than 6,700 vehicles, which will take its total tally for FY ’22 to 2.4 million vehicles, the most in its nearly four decades of operations.
Prices in trade market- As on week thirteen of the CY ’21, SteelMint’s benchmark prices for 2.5mm thickness HRC is in the range of INR 55,000-56,000/t (exy-Mumbai) up by around INR 1,500/t w-o-w basis. Traders have already raised the local prices ahead of official price announcement by major steel mills.
*The prices mentioned above are as per SteelMint HRC methodology.
Near term outlook– Mills are planning to lift HRC and CRC prices as per the changing international market situation. End user industries have already anticipated the hike in input cost and have announced price hikes from Apr ’21 onwards. For instance, Blue star Ltd, a well-known white goods company, will be hiking prices by 3-5%. Indian Automobile companies, Hero Motor Corp & Maruti Suzuki, have also announced an increase in ex-showroom prices of their products from Apr ’21 onwards
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