Indian mills gearing up for another price hike in flats, market acceptance uncertain

Indian steel biggies are planning to lift HRC & CRC prices further for Oct’20 deliveries. Although the quantum of hike is  not announced yet by the mills, but trade sources expect it to be around INR 1,000/t ($14). Tight supply and improved demand in the domestic market has created a room for price hike.

In the month of Sep’20 steel mills have announced a hike in HRC and CRC prices twice, except SAIL increased CRC prices thrice this month.

Factors behind consecutive price hikes by mills –

1. Supply shortage – Shortage of thinner gauge HRC continues to prevail in the market. Also “mills may supply 25-30% less compared to Sep deliveries on backlog orders of exports”, shared one of the major stockiest in Mumbai. Meanwhile, the CRCA mill 1 in JSW Vijaynagar plant will be operational from Nov or Dec, thus supplies are likely to remain tight near  term.

2. Absence of imports-Market has not been strong since last few days in HRC however there is hard option to procure import material. Thus traders have to accept higher prices from integrated steel mills. Higher global prices and frequent lockdown resulted in the absence of imports in the country which in turn drove domestic prices.

3. Improved demand in the auto sector – As per market sources, original equipment manufacturers (OEM’s) are restocking inventory at the dealers’ end. Less rains and good Rabi harvest are among the factors which would keep demand for tractors upbeat. Sales momentum would continue in the festive season and passenger vehicle inventory would sustain.

SteelMint price assessments of key trade markets

• HRC (IS 2062, 2.5 – 8mm) prices are assessed at INR 41,000-42,250/t (exy-Mumbai), INR 41,500-42,500/t (exy-Delhi) while INR 42,000-42,500/t (exy-Chennai).
• CRC (0.9 mm IS513 GR) are currently seen at INR 50,500-51,500/t (exy-Mumbai), INR 51,500- 52,500/t (exy-Delhi) and INR 51,000- 52,000/t (exy-Chennai).
• Prices do not include GST extra @18%.

Trade segment outlook – Traders and distributors are of opinion that the trade market is expected to soften after a few days in HRC on low buying. However, demand in CRC is expected to remain good and further hike in price shall be absorbed in the trade market. Thus the spreads between HRC and CRC will continue to widen in the upcoming month.