Major Indian steel mills are planning for a significant hike in plate prices following an increase in hot-rolled prices and supply crunch prevailing in the domestic market. The revival of construction and infrastructure projects continues to support higher plate prices.
Currently, SteelMint’s benchmark assessment for the HR-plate (IS 2062) stands at INR 54,500-55,500/t exy-Mumbai. Price is exclusive of GST @ 18%.
SteelMint identifies few factors which contribute to the steep hike in plate prices:
1.Spurt in auto demand-
Maruti Suzuki India Ltd. posted total sales of 160,226 units in Dec’20, this is a growth of 20.2% over the 1,33,296 units sold in the same month last year, the country’s largest automaker said in a statement. Domestic sales rose 19.5% at 1,50,288 units and exports were up 31.4% at 9,938 units.
Mahindra & Mahindra’s farm equipment segment, on the other hand, registered a 25% growth in sales in Dec ’20 at 22,417 units as compared to the 17,991 units sold last year. Domestic sales were up 23% at 21,173 units, while exports rose 60% at 1,244 units.
As per FADA’s press release for Nov ’20, the tractor registration data have gained by 8% y-o-y to 49,313 units, while it surged by 49% to 73,003 units in 42 days Festive period against CPLY.
2.Revival of Govt infrastructure projects
Witnessing a major setback on COVID related hindrances, the construction sector had suffered a lot. Govt. has set the construction activities in motion with various projects getting started or revived.
In the month of Dec’20,Union Minister Nitin Gadkari inaugurated and laid the foundation stone for 27 highway projects in Assam, the Ministry of Road Transport and Highways said.These projects have a road length of nearly 439 kilometres, involving construction value of Rs 2,366 crore. He has also laid down the foundation stone and inaugurated projects worth Rs 11,000 crore in Karnataka. The Government has lined up a list of high-value and high-impact infrastructure projects for inauguration in the next one month.
3.Revival of Real Estate Sector-
Riding on the back of stamp duty cuts and the festive season, the residential sector in Mumbai recorded the highest-ever registrations in the month of Nov’20 over the last nine years. A total of 9,301 units were registered in the metropolitan in Nov ’20. The figures show a 67% year-on-year (YoY) rise over the same month last year, according to Knight Frank India, a leading international property consultancy.
SteelMint learned from market reports that retail infrastructure projects have resumed post lockdown. “A strong focus, along with a sustained spend on infrastructure development would result in multiple long-term benefits” Deepak Shetty, CEO & Managing Director of JCB India, said in an interaction with Business Line
Will this price sustain in the domestic market?
Few plates procuring companies are postponing the procurement for Hot-rolled coils at INR 55,000- 56000/t (exy-Mumbai) levels. Traders are reluctant to purchase material at higher prices because their end product prices are not increasing which reduces profit margin.We will have to wait and watch to see how the situation unfolds.
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