Demand for hot-rolled coils (HRC) and cold-rolled coils (CRC) in the domestic market have witnessed signs of improvement in anticipation of a healthy festive demand. Thus, SteelMint’s weekly assessment for HRCs (2.5-8mm) stands more or less stable at INR 56,000-57,000/t ($701-713/t), showing a slight INR 400/t ($5/t) increase, while CRCs (0.9mm) remained unchanged at INR 65,000-66,000/t ($813-826/t). The prices are on ex-Mumbai basis, excluding GST at 18%.
Why have prices remained stable?
1. Increase in list prices by INR 500/t ($6/t): Steel mills such as JSW Steel and Tata Steel have announced an increase in list prices of HRCs and CRCs by INR 500/t ($6/t) early this week, for end-September, 2022 sales. Post-revision, the effective prices stand at around INR 57,000-57,500/t ($713-719/t) for HRCs and INR 64,000-65,500/t ($800-820/t) for CRCs on ex-Mumbai basis, exclusive of 18% GST. As a result, demand as well as prices moved up slightly in the trade market.
2. Improvement in downstream demand: Demand from downstream industries such as automotives, pipes and tubes has showed signs of recovery. “We are seeing robust orders from downstream industries, ie, auto, PEBs, as well as from the pipes and tubes sector,” informed a source from a leading mill.
For instance, automobile production stood at 2,275,407 units in August, 2022 – up by 15% as against 1,984,676 units in the same period of last year as per the Society of Indian Automobile Manufacturers (SIAM).
3. Supply concerns: According to market sources, there is a supply concern from mills’ end which is also lending support to trade prices. In August, the retail segment was not in the mood for restocking amid lack of clarity in prices and thus was operating on lean inventories. Meanwhile, in a falling market, mills decided to prepone their maintenance schedules. However now, when the market is indicating signs of recovery there is a demand-supply mismatch as a result of which trade level prices are getting support.
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