Indian flat steel majors are looking to increase hot rolled coil (HRC) and cold rolled coil (CRC) list prices for early October sales in the next few days. Market participants are anticipating an INR 1,000-1,500/t ($12-18) increase by mills. Trade-level prices have taken the cue with prices moving up by around INR 1,000/t ($12) w-o-w.
SteelMint’s benchmark weekly price assessment for HRC stood around INR 57,000-58,000/t ($698-710), up by INR 1,000/t ($12). For CRC, the prices were assessed at INR 65,500-66,500/t ($802-814), an increase of INR 500/t ($6). Prices mentioned are on an exy-Mumbai basis, excluding GST @ 18%.
Mills have also shifted their focus to the better realisation fetching domestic market. A few mills, however, have floated offers at around $620-630/t (INR 50,660-51,480) CFR Vietnam and $630-640/t (INR 51,480-52,300) CFR UAE and are awaiting counter bids.
Overseas demand remains impacted for Indian mills because global economies are getting increasingly concerned about rising interest rates, currency depreciations and recession. SteelMint’s India HRC (SAE1006, boron added) export index stands unchanged w-o-w at $583/t (INR 47,640) FOB east coast this week.
Why are trade-level prices on the rise?
1. Green shoots in end-user demand: Most of the end-user industries had slowed down their procurements over the past few months amid a continual decline in prices. However, buying sentiments changed for the better from August as buyers started a steady pace of procurement. Automobiles, white goods and yellow goods industries showed improved performances.
Infrastructure and construction, which accounts for approximately 60% of steel demand, is also picking as the festive season approaches. For instance, property registrations in Mumbai, the country’s biggest and most expensive real estate market, logged a 22% y-o-y increase this month as buyers shrugged off rising interest rates and prices, making it the best August in terms of number of deals and stamp duty revenue. The city recorded more than 8,310 property transactions during the month, raking in more than INR 630 crore in stamp duty revenue for the state exchequer, showed data from the inspector general of registration, Maharashtra, as on the last operational day of August.
2. Improved restocking ahead of festival: The inflow of orders from distributors has improved further. Sustained procurement by end-buyers and limited restocking during the April-August period had led to a depletion of inventories in the distribution channel. Meanwhile, demand is expected to improve in the near term with more end-user industrial buyers coming out to procure ahead of the Diwali festival.
3. Mills yet to operate at optimal levels: Supplies are constrained at present as mills are yet to completely come out of their maintenance shutdown, sources informed SteelMint. For instance, a leading primary player’s capacity utilization stood at 87.4% in August 2022 as against 92% a year ago. Thus, mills are now finding it a bit difficult to cater to the sudden uptick in demand. This comes despite improved domestic allocations as export volumes have taken a hit of 54% y-o-y in April-August, 2022, post-the duty announced on 21 May 2022.
“Some mills are yet to complete their maintanance runs, which has kept supplies constrained. Supplies are anticipated to improve in a month’s time,” infromed reliable trade channel sources.
Leave a Reply