Domestic HR-plate prices spiked by INR 1,500/tonne (t) ($20/t) this week, hitting an all-time high, on the back of price hike by mills and a demand-supply gap.
For week 43 (18-23 Oct’21), SteelMint’s assessment for HR plates (IS 2062/E250, 5-10mm) stood at INR 72,000-73,000/t ($962-975/t) exy-Mumbai contrasted against INR 70,500-71,000/t ($942-948/t) exy-Mumbai a week back. Prices are basic, excluding GST at 18%.
Answering the question on the sudden spike in prices and restocking activity, a western India-based major distributor said, “Generally, the trade market prices are quick in changing momentum compared with what the mills announce. Further, limited bookings in the past months had resulted in lean inventory in the distribution channel, and with the onset of Oct’21 the participants have come rushing to stock before price adjustments were made by mills.”
Factors that are impacting the market prices:
1. Price hike by mills: A PSU steel major recently announced a price hike of INR 750/t ($10/t) in HR-plates effective from 19 Oct’21. Further, market participants are growing concerned about future price hike announcements as mills are looking forward to pass on the impact of higher raw material prices in the trade segment.
2. Demand-supply gap emerges: The market prices are also getting elevated due to supply constraints being witnessed over the past few weeks. “The market is facing shortages majorly in thickness above 8mm, and this scenario has been similar for the past couple of weeks. Meanwhile, trade activities are still confined to distribution channel participants,” said another market participant from the north.
3. End-user segment demand yet to pick up: Most of the market participants concur on the low end-user demand in the market. Although the monsoons are getting over, the construction and infrastructure segments are yet to see an increase in activities. Most participants opine that the scenario might continue till the Diwali festival in early Nov’21.
What lies ahead?
Prices in the trade segment have increased significantly from INR 68,000-69,000/t exy-Mumbai levels seen at the beginning of Oct’21.
However, by mid-week, the market fell silent with supply-side constraints and the recent market buzz on crashing of metal prices on China’s stock markets.
The mills are bullish on further upward revision in prices. The trade segment is abuzz that there may be a price increase of INR 1,000-2,000/t in the first week of Nov’21.
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