Can Indian Steel Prices Go Up Further in September?

Indian steel both flat and long prices have reported upward trend in last few weeks.

Globally too, steel prices have shown an upward trend owing to increasing raw material prices and absence of Chinese material.

There are several factors that indicate  Indian steel prices will stay strong in this month.

1. Rising Export: It was earlier reported that export from India has increased in the month of August. Trade restrictions on Chinese steel in several countries and higher steel prices are favouring Indian steel manufacturers.
 
Export enquiries remain strong in September. India will turn a net exporter in this financial year.
 
2. Low Import: Recent anti-dumping duty on flat steel and MIP on long and semis have reduced import to India significantly. Indian import dropped by over 145% to 0.91 MnT against 0.37 MnT in Jan’16 .
 
3. Higher Raw Material Prices in Seaborne Market:  Raw material prices showed a strong momentum in last few weeks. Be it coking coal, scrap, thermal coal, iron pellets, manganese ore or silico manganese, offers of all material have increased in north direction. 
 
Global and Domestic Steel Prices as on 8 Sep’16

Source: SteelMint Research

4. Lack of Availability of Railway Rakes: Increasing iron ore and pellet export from East Coast India has created a shortage of railway rakes. Steel manufacturers report that moving iron ore from mines to plant site has became a challenge. Steel and sponge iron manufacturers may run short of iron ore if situation persists.
 
5. Large Manufacturers May Roll More Flat Steel than Longs: Interestingly, Indian manufacturers have higher conversion in rolling out flat steel over longs. It is expected that in coming month large manufacturers may prefer to roll out more flat steel. For instance, a large manufacturer will fetch a net sales realization (NSR) of around INR 26,000/MT (USD 394) for long and INR 29,000-30,000/MT (USD 439-455) for flat.
 
Note. Rebar prices including Excise. 

Risk Factors
 
There are also some risk factors that may resist Indian steel prices to go up further.
 
Appreciating Rupee: Strong Indian currency may put brakes to rising steel prices. Export will fetch low realizations; import may become cheaper.