Domestic trade reference prices of hot-rolled coils (HRC) witnessed a spurt across major markets in anticipation of a steep increase to be announced soon by steel producers. The quantum of increase in trade prices ranged between INR 2,500 -3,000/t for different markets.
Indian private steel major ArcelorMittal Nippon Steel India (AM/NS India) today announced an increase of INR 2,500/t for HRC and cold-rolled coil (CRC) for early March sales.
Announcement from other mills is awaited but the quantum of hike is expected to be at around same levels, SteelMint learnt from sources.
Factors driving domestic prices
1. Decent export bookings until mid-April: Most of the steel producers are well booked for exports until mid-April after having actively booked HRC for exports in the past couple of months. Meanwhile, increased demand from the European mills has sent the export offers skyrocketing with deals being concluded at elevated prices in the range of $965-967/t, $1,020-1,025/t and a recent one at $1,060/t (INR 80,514/t) CFR Europe for April deliveries.
This has led to reduced interest for the traditional markets of Vientam and the Middle East, keeping the weekly assessment of Indian HRC export index flat at $864/t FOB east coast.
2. Raw material prices shoot up: The prices of raw materials have also shot up considering the disruptions caused by the recent invasion of Ukraine by Russia. For instance the prices of Australian origin premium hard coking coal shot up by $18/t d-o-d to $501/t CNF Paradip, as assessed on 03 Mar’22.
3. Restocking activities pick up: Trade market activities picked up recently as the distribution network participants rushed out to restock anticipating significant hike during March.
It is also to be noted that, the much of the distribution channel had been working on lean inventories since Nov’21 as the prices went into correction. Prices tumbled from INR 72,100/t ($949/t) exy-Mumbai in early Nov’21 to INR 63,100/t ($830/t) towards the end of Dec’21, marred by subdued demand and low confindence for restocking by the trade channel participants.
India’s industrial production (IIP) fell to 0.4 per cent in December 2021 from 1.3 per cent in the previous month (November 2021), according to official data, this was the slowest growth in 10 months.
“The domestic market prices stand discounted against what the mills are offering in the European market, also for other regions it will rise soon. Thus, mills will bridge this gap by increasing the prices for sales in the domestic market,” a source informed.
Outlook
Going forward, the HRC-CRC price levels are likely to remain strong in the short- to medium-term as trade channel checks suggest that due to the ongoing geopolitical tension, imports from Russia will now reamined curtailed.
Indian mills are quite bullish on capitalising on this by strengthening their presence in existing overseas markets and also exploring new geographies for exports. This will keep the domestic market bullish.
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