Major Indian steel producers have taken up two rounds of price hikes for hot-rolled coils (HRC) and cold-rolled coils (CRC) in Oct’21 backed by the spurt in restocking activities and an increase in coal prices, pushing up hot-rolled coil (HRC) prices to all-time highs.
1. JSW Steel Ltd announced an INR 1,000/t hike effective 16 Oct’21. Prior to this, the mill had raised prices by INR 1,200/t earlier this month.
2. PSU steel major SAIL had announced its third hike of INR 750/t effective from 19 Oct’21. The mill hiked prices by INR 1,500/t at the beginning of the month, followed by a second hike of INR 750/t by mid-month.
3. Tata Steel Ltd announced a hike of INR 750/t effective 15 Oct’21.
The domestic HRC trade reference prices have been scaling new highs since the beginning of Oct ’21, as a result of these price hikes.
SteelMint’s benchmark price assessment for 2.5-8 mm IS 2062 HRC stands at an all-time high of around INR 72,000-73,000/t (exy-Mumbai), significantly up by INR 1,600/t as against INR 70,500-71,000/t a week back. However, CRC (IS 513 Gr O, 0.9mm) prices remain range-bound at INR 75,500-76,000/t (exy-Mumbai), unchanged w-o-w. Prices mentioned are exclusive of GST @18%.
What factors have pushed the mills to these hikes?
1. Increased coking coal prices: The prices of imported coking coal have continued to rise. The prices of Australian premium hard coking coal (HCC) scaled up to $430.90/t CFR Paradip in the previous week from $425.13/t towards the end of Sept’21. Mills are likely looking to get this increase in costs disseminated in the trades market.
2. Increase in restocking activities: The distribution network participants had come out to restock as the mills announced their intent on price increase for Oct’21. “The trade market activities have remained largely confined to the participants in the distribution channel. The end-users are procuring in smaller quantities and on an urgent need basis,” said a north India-based distributor.
3. Anticipation of demand recovery: Demand is likely to improve as the monsoon season is over. Further manufacturers are of the view that demand shall pick up now from various segments with an increase in sales ahead of the Diwali festival.
“The recent price increases are based on various factors such as- surge in restocking actives, the spike in coking coal prices, supply concerns around thermal coal and an anticipation of demand recovery,” shared a credible market source.
4. Export opportunities amid declining production from China: Manufacturers might gain access to more opportunities in overseas trades as China is reducing its production capacity. Furthermore, this has also started clipping the export allocations of the Chinese mills alongside the removal of rebates earlier this year.
Also, the Indian HRC export offers are still competitive against the Chinese offers which stand at around $970-990/t FOB as per the current week’s assessment. SteelMint’s Indian HRC export index stands at $873/t FOB east coast as of the current week.
Outlook
The mills have remained bullish about the increasing trade segment prices and demand lately. However, the market chatter around the turmoil in the Chinese stock market has brought some moderation in domestic market sentiments. “The sentiments have come down in the market after today’s media buzz around the decline in Chinese steel stock market prices,” said a western India-based distributor. Thus, it would be interesting to see how the market moves in the near term.
Leave a Reply