With no major announcements for steel sector in budget 2016-17, flat products prices are increasing due to MIP announced on 5 Feb’16.
After continuous fall in domestic flat product prices especially since last one year, the MIP announcement on 5 Feb’16 has finally provided respite to the steel industry which is already dealing with predatory pricing and cheap imports.
HRC/CRC prices have surged by about INR 3,500-4,000/MT post MIP. Also SteelMint has heard that Indian steel majors are likely to increase flat product prices further by INR 2,000/MT.
Current offers for 2.5mm HRC (IS2062) are being assessed at INR 33,500-34,000/MT (ex-Delhi), INR 33,500 (Ex-Mumbai) and INR 34,000-34,750/MT (ex-Chennai).
While offers for 0.9 mm CRC are heard at INR 38,500-39,000 (ex-Delhi), INR 37,000-37,5000 (ex-Mumbai) and INR 38,000 (ex-Chennai). All prices include excise of 12.5%.
“Although there is no increase in demand from the end users segment, steel majors are creating artificial shortage of flat products in order to hike prices. Domestic prices are likely to move up by another INR 4,000-5,000/MT in the coming days. This is because steel manufacturers will increase prices till it equals the landed cost imports at MIP rate”, quoted a trader based in Delhi.
Flat Product Prices as on 1 Mar’16
| Particulars | 2.5 mm HRC Prices | 0.9 mm CRC Prices |
| Ex-Delhi | 33,500-34,000 | 38,500-39,000 |
| Ex-Mumbai | 33,500 | 37,000-37,500 |
| Ex-Chennai | 34,000-34,750 | 38,000 |
Prices in INR/MT
Source: SteelMint Research
Steel Demand Likely to Move Up Post-Budget 16-17
In financial budget 2016-17, the government announced road and rail projects amounting to about INR 1.8 lakh crore which would boost steel demand including long products demand for construction projects.
Also the government focused on rural electrification projects, irrigation schemes etc which will also lead to improved steel requirement.
However increase in clean energy cess on coal from INR 200/MT to INR 400/MT would impact steel industry considerably as coal is the key raw material for steel making process.
Also government has announced removal of tax exemptions available in the form of weighted deductions for scientific research and R&D programme as many research activities are usually being undertaken for the development of steel technologies and products.
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