The weekly assessment for Indian domestic trade-level prices of hot rolled coils (HRC) remained unchanged this week. Festive holidays over the past few days have put a leash on trade activities this week as most buyers stayed away from the market.
SteelMint’s benchmark assessment for HRCs (IS2062, 2.5-8mm) stood at around INR 57,000-58,000/t, and CRCs (IS513 Gr O, 0.9mm) at INR 65,500-66,500/t, both unchanged w-o-w. Prices mentioned above are exy-Mumbai, excluding GST @ 18%.
Traditionally, Dussehra-Diwali is a seasonally slow period with respect to trading in flat steel products. However, mills have increased prices in anticipation of a pick-up in demand from industrial consumers owing to better sales this festive season.
Factors lending support to the trade-level prices:
1. Mills raise prices for Oct sales: Indian steel majors have raised their list prices of HRCs and CRCs by INR 1,000/t for early October sales. Post-revision, list prices of HRCs now stand at around INR 57,000-58,000/t and CRCs at INR 65,000-66,000/t exy-Mumbai, excluding GST @ 18%.
2. Supply constraints: Indian steel majors are struggling to keep up with the recent uptick in demand after having taken up maintenance shutdowns in a phased manner since mid-June. Steady buying but in a need-based manner by end-users over the April-June period amid continual decline in trade level prices had weighed on the restocking activities. This pent-up demand emerged in mid-September as sellers rushed to restock, after mills indicated a hike of INR 500/t for end-September sales.
A leading primary player’s capacity utilisation stood at 87.4% in August 2022 as against 92% a year ago, showing a slower pace in improving output volumes.
Furthermore, mills are now more focused on supplying to the domestic market amid better realisations as compared to those in the overseas markets. SteelMint’s India HRC export offers stand unchanged for the third consecutive week at $583/t FOB east coast.
3. Moderate demand keeps trade-level prices supported: Demand has remained steady through September after having improved gradually in the July-August period. Restocking needs also helped support the price levels towards mid-September.
Meanwhile, a market sentiment survey done by the Reserve Bank India (RBI) shows better drive for spending on essential items with projections at 77.3% in September. This is up from the projection for July at 76.4%. Also, there has been a decline in discretionary spending in the past couple of months — a positive factor. Meanwhile, automobile and white good industries have shown improved sales performances over the past month and are expected to have a good festive sales season.
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