- Sharp September-October hikes
- Moderate demand could limit near-term buying momentum
India’s major domestic steel mills have further increased flat steel price lists for October deliveries, extending the upward price trend seen through September. Hot-rolled coil (HRC) list prices increased by INR 750-1,500/t, taking levels to around INR 63,100-65,500/t, while cold-rolled coil (CRC) price lists rose by INR 800-2,000/t, taking levels to around INR 71,400-75,800/t.
In the coated segment, galvanized plain (GP) and pre-painted galvanized iron (PPGI) price lists increased by around INR 1,000-2,000/t.
From September to October, cumulative mill price-list increases stood at INR 2,700-4,500/t for HRC and INR 3,500-5,500/t for CRC. In the coated segment, GP and PPGI price lists increased by INR 3,500-5,000/t over the same period.
Market sentiment
The latest price revisions have kept the market sentiment positive, although demand remains moderate. Successive price increases have made buyers more cautious, with many adopting a requirement-based purchasing approach rather than building significant inventory at current price levels.
The key market question is now whether the latest mill increases can be fully absorbed at the trade level. If trade prices continue to move up, mills could retain room for another round of increases. However, sustained resistance from buyers could make further hikes increasingly difficult to pass through.
Supply and cost factors
The current price movement is being supported by a combination of higher raw material and energy costs, relatively tighter HRC availability and stronger export economics.
Coking coal prices increased by 25% m-o-m to about $300/t in September, raising the raw material cost for blast furnace-based steelmakers. Non-coking coal costs also increased, with CIL e-auction premiums rising to 94% over notified prices in September from 59% in August, amid lower auction availability. Higher power costs are also adding to production costs for coal-based and secondary steel producers.
On the supply side, domestic HRC availability has remained relatively constrained. Net HRC production declined from around 2.67 million tonnes in July to 2.25 million tonnes in August, while maintenance activity at major mills and lower material arrivals have reduced availability in the merchant market.
Higher steel exports have also reduced the incremental volumes available to domestic buyers. At the same time, the depreciation of the Indian rupee has increased the domestic cost of imported coking coal and other dollar-denominated inputs, while improving the rupee realisation for exporters.
Together, these factors have strengthened the cost base of domestic mills and provided support for higher flat steel offers, even though downstream demand has not improved at the same pace.
Outlook
Major domestic mills are likely to test the market with further price increases in the coming month, particularly if raw material costs remain elevated and finished steel availability stays controlled.
However, the next leg of the rally is likely to depend more heavily on actual trade-level price absorption. With buyers already becoming cautious after the successive September-October increases, a further sharp rise in mill offers could face resistance unless downstream demand improves.
The market is therefore entering a critical phase where cost pressure continues to point upward, while demand could determine how much of the increase can ultimately be passed through.
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