Trade-level prices of coated steel products remained rangebound this week, while demand is recovering at a slower pace. However, a major private mill has increased its list prices for coated flat steel products by INR 750/tonne (t) for end-September sales.
Subsequent to the announcement, revised list prices of GP (0.8mm, 80gsm) stands at around INR 68,050/t ($838), and PPGI (0.5mm, 90gsm) at INR 79,250/t ($975). Prices mentioned are on an exy-Mumbai basis, excluding GST at 18%. Other major mills are likely to follow suit.
Notably, this is the first hike in the coated steel product portfolio since the last increase announced for early-April 2022 sales.
Current weekly assessment for GP (0.8mm, 120gsm) stood at INR 67,000-68,000/t ($825-837) and PPGI (0.5mm, 90gsm) at INR 76,000-77,000/t ($935-948), both unchanged over the week. Prices are on an exy-Mumbai basis, excluding GST at 18%.
Factors driving coated steel prices:
1. Restocking demand takes the lead: Steady sales and limited volume restocking over the past few months led to a depletion of inventories in the distribution channel. This has pulled out more participants to restock in anticipation of a price increase announcement of INR 1,000-1,500/t by mills for October sales, opined distribution network participants.
“Restocking demand has improved over the past couple of weeks, and we are seeing more and more participants sending in requirements,” informed a few mill-based sources. Requirements from pre-engineered buildings (PEBs) and green energy segments are also floating in. An increase in construction activities post the festive period and the onset of winter will pull out more buyers.
Thus, the restocking requirements should pick up more pace.
2. Impact of maintainance shutdowns: The mills having taken maintance shutdowns ahead of their schedules in July-August have helped mills in avoiding a major inventory pile up. For instance, the production volumes have dipped by 9.61% m-o-m and 6.31% y-o-y to 3.86 mnt in August 2022. Meanwhile, a slower yet steady inflow of demand from a few end-user industries and trade channel participants has helped in easing off of inventories over these months.
3. Anticipation of demand pick-up: Another major factor behind the increase in restocking demand is the anticipation of a pick-up in demand in the coming weeks. The retreat of monsoons and festivities would bring more industrial buyers out with requirements in the upcoming weeks. PEBs are already coming up with requirements and other infrastructure and construction businesses would also likely come out.
For instance, in the green energy segment, Tata Power Renewable Energy Ltd (TPREL) has won three letters of award (LoA) for development and commissioning of solar power projects this month.
- Development of 100 MW captive solar power plant for powering the stainless steel plant of Viraj Profile Pvt. Ltd at Tarapur. Commissioning expected to be done by July 2023.
- Setting up a 125MWp floating solar project for NHDC Limited (NHDC) at Omkareshwar reservoir in Madhya Pradesh, and its commissioning within 13 months of grant of LoA.
- Setting up 100MW ground mounted project for SJVN in Gujarat and commissioning within 11 months of grant of LoA.
These are also among factors supporting demand for coated flat steel products including bare galvalume (BGL) used majorly in solar pannel setups.
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