Indian large steel producers have increased long steel prices by INR 1,000-1,200/MT (USD 15-18) according to market sources.
Prices have increased consecutively in last couple of months. Current offers for 12-25 mm re-bar assessed at INR 34,500-35,000/MT (ex-Mumbai), which was 33,500-34,000/MT last month. Prices in Delhi are assessed at INR 35,000-35,500/MT for same size. Prices are excluding 18% GST.
SteelMint learnt from market sources that this price hike is attributed to increase in exports and expensive raw material. Although, domestic demand is not very encouraging specially in construction sector, which is major consumer of long steel.
Reasons for hike in Prices
1. Increase in exports
Indian exports are surging high due to absence of Chinese steel and high global prices. According to ministry of steel, Indian exports increased to 0.71 MnT in July 2017, which was 0.58 MnT in June 2017 & 0.43 MnT in July 2016.
Large steel manufacturers like JSW, SAIL and RINL have booked decent quantities for export in last few months and they do not have much pressure to sell in domestic market at lower price.
2. Falling long steel production
Indian ministry of steel reports that long steel production by large players have decreased by 6.7% in July 2017 as compared to June 2017. SteelMint learnt that several manufacturers have switched to flat steel production owing to better realizations.
3. Domestic steel consumption falls
Domestic steel consumption falls by 2.75% in July 2017 owing to seasonal slow down and implementation of GST.
4. Increased raw material cost
Domestic iron ore prices increased by INR 300-500/MT in the month of August by private miners. Where as imported coking coal prices also increased by USD 25-30/MT.
Market participants mention that there is limited room for fall in domestic prices as they are trading much if compared with global prices.
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