Indian steel mills have announced a steep hike in list prices of HRC by INR 1,000-1,250/t ($13-17) for Nov deliveries. The price hike is backed by improved auto demand along with short supply hovering in the trade market.
Factors behind price hike-
1. Major steel mills undergoing maintenance shutdown – Trade sources shared with SteelMint that Tata steel’s Jamshedpur plant is planning to undergo maintenance shutdown in its CRM mill for a few days. However company officials couldn’t confirmed while publishing this report. Meanwhile, the CRCA mill 1 in the JSW Vijayanagar plant will be operational from Dec. Thus tight supply is leading to further hike in prices, SteelMint learned from its trade channels.
Also, western India based market participants shared that JSW Steel is passing its HRC coils mainly to downstream industry owing to improved demand in galvanized and color coated products.
SteelMint learned from its trade channels that few key steel mills have their plant maintenance scheduled which may result in shortfall of supplies by around 150,000t roughly this month.
2. Imported HRC bookings remain limited- The market has not been strong for the last few days in HRC however there is a hard option to procure imported material. Thus, traders have to accept higher prices from integrated steel mills. As per data maintained with SteelMint Indian flat steel imports stood at 0.3 mn t in Sep’20 which was around 0.48 mn t in Sep’20.
3. Robust demand in auto – Maruti Suzuki in its Q2FY21 in its financial results mentioned that the company sold a total of 393,130 vehicles during the quarter, higher by 16.2% compared to the same period the previous year. Sales in the domestic market stood at 370,619 units, higher by 18.6%.
Amid the arrival of the festive-season Indian car and bike makers reported their best monthly sales growth in September. Passenger vehicle sales witnessed an increase of 26.45% and two-wheeler sales rose to 11.64%, according to data available with industry body Society of Indian Automobile Manufacturers (SIAM).
4. Indian iron ore prices hit two years high – India’s state-owned iron ore miner – National Mineral Development Corporation (NMDC) has increased prices by 4-5% for Nov’20, sources have reported SteelMint. The prices for Baila lump and fines have been increased by INR 150/t and that of DR CLO by INR 170/t. With the recent hike announced, NMDC prices have hit 2-year high levels.
Effective prices of major mills for Nov deliveries –
- JSW Steel – Effective prices of HRC stand at INR 44,000- 44,400/t and CRC at INR 53,000/t (exy-Mum).
- AM/NS India – Revised offers of HRC stands at around INR 43,750/t and CRC at INR 53,000/t (exy-Mum).
- JSPL also raised HRC prices by INR 1000/t and is offering at INR 44,000/t (exy-Mumbai).
- Govt owned SAIL is offering HRC at INR 44,200/t (exy-Mumbai) and CRC at INR 53,000/t (exy-Mumbai)
- Tata Steel is offering HRC at INR 44,750/t (exy-Mumbai) and CRC at INR 53,750/t (exy-Mumbai)
- Price does not include GST @18%
Notably, HRC prices in the trade segment have shot up and are hovering at two-year high levels, as per data maintained with SteelMint. SteelMint’s benchmark price for HRC (IS2062 2.5-8mm) stood at INR 44,500/t (exy-Mumbai) and CRC (0.9 mm GR) is around INR INR 54,500/t (exy-Mumbai). Prices do not include GST @18%.
Outlook- Market participants shared that HRC and CRC prices are expected to remain strong in the near term on short supply and improved demand in the trade and auto sector. Also, high domestic iron ore prices may keep steel prices supported.
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