Indian steel mills have recently announced a third round of price hike by INR 1,000-1,500/t ($14- 20) for Dec’20. Robust demand, strong global prices, tighter material availability and cost push have resulted in the continuous upside in domestic flat steel prices.
Effective prices by major steel mills
- JSW Steel- HRC offer stands at INR 50,400/t and CRC at INR 59,650/t (exy-Mumbai).
- AM/NS India – HRC offer stands at around INR 50,150/t and CRC at INR 59,250/t (exy-Mumbai).
- Tata Steel- HRC stands at INR 50,750/t and CRC at INR 60,750/t (exy-Mumbai).
- Other mills like SAIL etc are likely to follow the suit.
- Prices do not include GST @18%
Before this major steel manufacturers had substantially increased HRC and CRC list prices by INR 2,000/t at the beginning of the month, followed by the second hike of 1,500-2,000/t in the last week.
SteelMint’s analysis a few factors that led to a price hike:
1. Cost push as iron ore offers climb- India’s largest merchant and govt-owned iron ore miner, NMDC has announced the 2nd price hike for Dec’20, SteelMint learned from credible sources. The price of Baila lump has increased by INR 700/t ($10), DR-CLO by INR 820/t ($11), and that of fines by INR 500/t ($7). The miner had announced a price hike of INR 500-580/t towards the beginning of Dec’20.
2. Restocking at traders end – Market participants shared with SteelMint that traders are heavily restocking the material. Also, few traders have started hoarding to maintain decent inventory in hand. Thus demand-supply mismatch and panic sales lead to increased profit margins among traders.
3. Growth in domestic passenger vehicle sales-The total production of passenger vehicles, three-wheelers, two-wheelers, and quadricycle stood at 22,96,701 units last month, up 1.7% y-o-y against 2,258,290 units in Nov ’19, according to Society of Indian Automobile Manufacturers (SIAM). Meanwhile, total wholesale sales of these vehicles stood at 18, 88,903 units, up 10% y-o-y compared to 17, 19,874 units in the same period last year. Also, robust demand from the auto and consumer durable sector compelled mills to increase the prices.
4.Global price surge – HRC export offers from major countries have increased by $20-40/t w-o-w. Recent HRC export deals concluded by Indian mills for Middle East and Europe at around $725-730/t and $750-775/t CFR respectively. Deal prices have increased sharply in the recent deals.
Prices in the trade segment-
- HRC (IS2062 2.5-8mm) stood at INR 51,000-53,000/t (exy- Mumbai), INR 54,000- 54,500/t (exy-Delhi), and INR 53,000-55,000/t (exy- Chennai).
- CRC (0.9 mm GR) is around INR 59,000-62,000/t (exy-Mumbai), INR 62,000- 65,000/t (exy-Delhi), and INR 63,000- 65,000/t (exy-Chennai).
- Prices do not include GST @18%
Outlook – The domestic flat steel market is expected to remain strong in Jan’21, as per sources. Prices are expected to further gain upward momentum on the back of higher international prices and tight supplies from domestic steel mills.
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