Key highlights
- Trade prices of HRC and CRC hit an all-time high
- Buoyant global rates to support domestic steel prices
- Indian mills announce 2nd hike in HRC & CRC prices
Indian HRC and CRC trade prices recorded an all-time high post announcement of the second price hike by major steel mills for Apr deliveries.SteelMint’s benchmark prices for 2.5mm thickness HRC stands at INR 63,000-64,000/t and CRC at INR 74,000-76,000/t (exy-Mumbai). The prices mentioned are basic and GST extra @18% is applicable.
Why domestic steel prices touch an all-time high? Let’s examine some factors:
1. Buoyant global rates to support domestic steel prices- SteelMint’s Indian HRC (SAE 1006) export index stands at $927/t FoB East-coast basis, up by $37/t w-o-w against $890/t FoB basis. Major steel mills are offering HRC export at $940-950/t CFR Vietnam for June deliveries, up by $20-25 against last weekend. The European market continues to see a price hike in both domestic and imported HRC markets. Last week, ArcelorMittal, Europe increased its coil prices by Euro 20/t. The current price of HRC stands at around Euro 920/t, CRC and hot-dipped galvanized at Euro 1,070/t.
2. Steel mills announced 2nd price hike in April– Major Indian steel manufacturers announced second price hike by up to INR 1,000-2000/t in HRC and around INR 3000/t in CRC in Apr’21 following bullish trends in the global HRC market
Effective prices of major mills;
- JSW Steel– Effective prices of HRC stand at INR 59,750/t and CRC at INR 72,000/t (exy-Mumbai)
- AM/NS India – Revised offers of HRC stands at around INR 60,000/t and CRC at INR 70750/t (exy-Mumbai)
- SAIL- Effective price of HRC stand at INR 59,000/t and CRC at INR 68,500/t (exy-Mumbai)
- Prices do not include GST @18%
3. Healthy demand from the white goods sector– India being a sub-continent nation, the demand for AC and refrigerators are likely to drive the consumer durable sector in Q1 FY ’22. SteelMint learnt from market sources that high input cost is likely to drive FMCD manufacturers to hike prices by 4-5% across products in Apr ’21. The industry had already hiked prices by 12-15% through Jan ’21 and Feb ’21. Amid the second COVID-19 wave, the work from home trend is likely to continue in states like Maharashtra which accounts for 12-15% of the domestic market for FMCD manufacturers and companies expect the sales to be unaffected by the price hike.
4. Bullish sales trend in the auto sector to continue – Passenger vehicle sales in the domestic market more than doubled year on year last month, albeit on a low base, driven by pent-up demand and consumer preference for personal mobility since the outbreak of the COVID-19 pandemic. Two-wheeler and commercial vehicle makers, too, reported robust sales growth last month. The Indian auto industry is expected to see stronger growth in 2021-22, after recovering from the devastating effects of the COVID-19 pandemic, with electric vehicle sales, especially two-wheelers, also likely to see positive movements, according to Nomura Research Institute Consulting & Solutions India.
Near term outlook- Going ahead, the price hike is likely to be absorbed as demand from export and the domestic market remains strong for steel. Also, the huge gap between trade prices and market prices has widened, which will provide enough scope to major steel mills to increase prices. Thus there is a strong possibility of another price hike in the Indian steel market as domestic HRC prices are still trading at a discount of around INR 7000/t in comparison to overseas steel markets.
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