Indian finished steel prices gained momentum in Q4 CY17 amid hike in raw material cost. Another price hike in flat steel was also noticed post GST (Goods and services tax) imposed by Indian government in the month of July.
Domestic HRC prices in India increased by 3% Q-o-Q to INR 38,950/MT (GST extra) in Q4 CY17. Also domestic rebar prices moved up by 4% Q-o-Q to INR 32,100/MT for 12 mm in Q4 CY17.
Why Indian flat steel prices showed steep hike in CY17-
1.Post GST Implementation prices of flat steel spurred in the domestic market-On 1st July’17 Indian government introduced the new taxation policy GST ( Good and services tax) which comprises of one nation one tax.Post implementation Indian steelmakers raised flat steel prices by INR 1000/MT.Also prices have increased in adjustment with new tax structure (GST) which was implemented on 1st July 2017. Earlier steel was taxed at around 12.5% as excise duty and 5% VAT which is now assessed at basic prices plus GST @ 18%.
2.Increased Production cost – Higher cost of raw material like iron ore,coal and scrap has resulted into significant surge in domestic flat steel prices.In Q4 CY17 Odisha iron ore prices increased by 15% and Australian Coking coal prices surged by 10% as compared to previous quarter.
3.Higher global prices in turn lead to increased prices in domestic market- In CY17 Chinese HRC export offers on average basis surged by USD 510/MT, jumped by 37% as compared to USD 373/MT in CY16.Meanwhile Indian HRC export offers assessed at USD 524/MT,spiked by 32% in CY17 against CY16.Thus better export realizations coupled with improved demand has compelled the Indian manufacturers to raise the prices in domestic market.
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