Domestic trade prices of HRC and CRC continue to remain high– Indian HRC and CRC trade prices continue to remain at an all-time high post announcement of a third price hike by major steel mills for April deliveries. SteelMint’s benchmark prices for 2.5mm thickness HRC stands at INR 64,500-65,500/t and CRC at INR 77,000-78,000/t (exy-Mumbai). The prices mentioned are basic and GST extra @18% is applicable.
*Prices mentioned above are as per SteelMint HRC methodology
Factors driving domestic trade prices:
1.Steel mills announced the third price hike in April- Major Indian steel manufacturers announced a third price hike by up to INR 1,500-3,000/t at the beginning of this week. Meanwhile, last week the mills announced second price hike by up to INR 1,000-2000/t in HRC and around INR 3,000/t in CRC in April ’21 following bullish trends in the global HRC market.
Effective prices of major mills after the announcement of the third hike:
- JSW Steel – Effective prices of HRC stands at INR 61,500-62,000/t and CRC at INR 75,000-75,500/t (exy-Mumbai)
- AM/NS India – Revised offers of HRC stands at around INR 61,000-61,500/t and CRC at INR 74,000-74,500/t (exy-Mumbai)
2. Indian HRC export offer increases in a recent deal concluded- Major private steelmaker based in Western India recently reported to have booked around 30,000 t HRC t UAE at $985-990/t CFR basis for June shipments, SteelMint learned from its authentic trade channels. Meanwhile, mills are offering HRC at $950-960/t CFR Vietnam and $1,040-1,050/t CFR to European nations. Indian mills have shifted their focus to exports on higher price realizations and improved demand in the global market.
3. Absence of cost-effective imports- Major exporting nations mainly Japan, China and South Korea have significantly raised HRC export offers. Major Chinese tier -1 steel mills are offering HRC at around $930/t FoB, while Japanese and Korean mills are offering at around $1,000/t FoB basis. Thus, imports are not a viable option at the moment for domestic traders which creates enough opportunity for steel mills to raise prices.
Will higher prices continue to sustain in domestic markets?
1. Disruption in supply chain due to lockdown announced in various states- As the coronavirus cases keep rising, several states have announced stringent restrictions, including night curfew. Government is even mulling a complete lockdown if cases continue to grow exponentially. States like Maharashtra, Uttar Pradesh, Punjab, Chhattisgarh are under lockdown and economic activities are severely affected. Thus, trades are restricted and higher steel prices might not be sustained in the market.
“Hit on the industry will be significant due to Maharashtra restrictions. The state is most crucial for the automotive sector due to high concentration of activity”, shared a market insider.
2. Lockdown measures leading to lower sales- SteelMint while acknowledging market reports, understands that the recently announced lockdown has affected sales volumes of consumer durables. Recently Maharashtra Govt. announced a lockdown which contributes 10-12% of sales and Madhya Pradesh contributes 4-5% of sales in the consumer durable sector. Rising covid-19 cases is impacting sales, especially in the cooling products segment, a similar trend was observed last year.
3. Mills may reduce capacity utilization in the near term- JSW steel, Dolvi plant is supplying 185 tonnes of oxygen daily to the State government. JSPL is supplying 50-100 tonnes of oxygen daily to hospitals in Chhattisgarh and Odisha. Meanwhile, govt owned SAIL is supplying 33,300 tonnes of oxygen from its integrated steel plants. This will impact production levels of all the mills and shortage of material in the domestic market.
Near term outlook- Mills may again follow the repeat trend seen a year ago to increase the export allocations if domestic sales are impacted by frequent lockdowns. Also, higher realizations in exports on bullish global market continue to have an edge over domestic price, especially is its corrected in the near term on limited trades.
Leave a Reply