The trade reference prices of the benchmark HR-plates (IS2062, 5-10mm) have witnessed an increase by INR 700-1,000/t in key markets this week on the back of active restocking in the trade channel.
Earlier this week, a State-owned mill officially announced an INR 1,000/t hike in PM-plates, effective 28 Sept’21. The list price after hike comes to around INR 67,000-67,500/t exy-Mumbai, exclusive of GST @ 18%.
Factors driving the domestic HR-plate market prices:
1. Cost push increase: The steel manufacturers are likely using the increase in prices of premium Australian hard coking coal (HCC), a reducing agent in the steel making process, as a barometer to justify a hike in prices. The monthly average price of benchmark Australian premium HCC spiked up 46% to the current highs of $420/t CNF India in September contrasted against $287/t CNF in Aug’21.
“Prices will surely go up next month, depending upon product category, mainly on the back of increasing coal prices,” said an official with a leading mill.
2. Restocking demand pushes up prices: With the distribution channel partners turning active, restocking activities have picked up pace in key markets such as Mumbai and Delhi.
For week 40 (27 Sept’21-02 Oct’21), SteelMint’s assessment for HR plates (IS 2062/E250, 5-10mm) stood at INR 65,500-66,500/t exy-Mumbai as compared with INR 65,000-65,500/t exy-Mumbai a week back. Prices are basic, excluding GST at 18%.
“Trade segment activities picked up by the afternoon session of 29 Sept’21 with trade participants rushing to restock on expectations that mills would announce a hike in prices next week. There has been an influx of inquiries and most deals are being closed on an immediate payment basis,” major distributors from northern India told SteelMint.
3. OEMs looking ahead at improved markets: The original equipment manufacturers (OEM), especially in the earth-moving equipment segment, are seeing better demand in the upcoming weeks. Also, heavy commercial vehicle manufacturers are looking ahead to increased demand on the back of improvement in mining, and construction and infrastructure activities once the recent cyclonic developments recede from the northern and central parts of the country.
China’s heavy-plate export offers continue falling w-o-w: This week, the assessed prices for China’s heavy plate exports stood at around $895-910/t FOB China, falling by $5-10/t as against $910-920/t FOB a week back. The early exit of market participants ahead of the Golden week festival on 1-7 Oct’21 has brought overseas buyers to standby status, as they await the resumption of the market post-holidays.
What to expect?
Market participants are expecting a hike of INR 1,500-2,000/t for October. But they are unclear how it may reflect in the current month’s price policy announcement. Also, mills have kept mute on whether they will lift any price support provided earlier or announce a hike in their list prices.
“The mills might lift any discounts or rebates provided in September. Or, announce a hike for October list prices next week by INR 1,500-2,000/t initially, and wait for the reaction from the trade segment over the same before making any further move,” shared a major distributor from the western region.
Leave a Reply