Indian primary mills have raised their list prices in Aug’21. As per the price announcements for long products, the Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Limited (RINL) have raised rebar prices by INR 1,000-1,500/t. After the hike, the offers for rebar (12-32 mm) stand at around INR 50,500-51,000/t ex-Mumbai, excluding GST.
In flat products, the primary mills have rolled over last month’s HRC and CRC list prices. However, they have withdrawn the trade-level rebates of around INR 1,000/t offered last month. Thus, trade prices witnessed an increase due to the rebate withdrawal although list prices remained untouched.
It may be recalled, in early Jul’21, mills had offered HRCs at INR 68,000/t exy-Mumbai (minus GST @18%). In mid-Jul’21, mills offered rebates of around INR 1,000/t to push up domestic sales.
Factors supporting the price rise
SteelMint had earlier reported that the price rise would likely happen, especially in long products.
Long products
- Exports liquidate inventory: Mills have liquidated substantial inventories through exports and thus are not under much pressure at present. Compared to Jul’21 inventory levels of 30 days, the Aug’21 load is lighter.
- BF-IF rebar gap narrows: The price gap between BF-and induction furnace-grade rebar has narrowed. Therefore, the price rise can be absorbed. Surprisingly, a few sources said small volumes of induction route rebar deals were concluded at prices higher than BF-grade in specific regions, propelling BF mills to strengthen their offers for Aug’21 deliveries. Generally, IF-route rebar prices are lower by INR 3,000-4,000/t, but this gap narrowed to around INR 2,000/t in a few locations.
Flat products
- Gap in list and trade prices: Mills have lesser scope to raise prices because end-user segment is unlikely to absorb a steep hike. However, since there is still a decent gap of around INR 1,000-1500/t between the mills’ list prices for HRCs and trade prices, the former have been encouraged to withdraw the rebates. The mills list prices are at INR 68,000/t while trade-level prices in Mumbai are at INR 66,500-67,000/t. Post-announcement of the list prices by the Indian mills, traders raised prices in domestic markets.
- Exports subdued: Lower appetite for HRCs from the Vietnam market since it is under lockdown and exhausted HRC export quotas for Europe have kept export trade in flats is subdued at present. Indian mills continued to explore export markets, and have collectively booked 40,000 t of HRCs to the UAE at $975-980/t CFR basis for Sept deliveries. Increased exports also offer scope to hike domestic prices.
Outlook
Traders and distributors are actively stocking up on inventory expecting further increase in prices. Domestic HRC trade prices are discounted compared to imported prices from major exporting nations. Thus, mills have enough headroom to raise prices following a hike in global HRC offers.
Indian primary mills are booked well for billet & rebar export shipments for Aug-Sept deliveries and hence may raise domestic offers further.
Prices as on 8:55 IST, 06 Aug. d-o-d changes indicated against closing price of 05 Aug.
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