Major Indian steel manufacturers are planning to raise flat steel prices by INR 1000/t, in line with higher international prices, towards the end of March’21, SteelMint learnt from credible sources.
Factors that may drive steel prices in the near term:
1. Higher export offers- Indian steel mills are actively exploring export options because of higher price realizations. Recently mills have raised HRC export offers to a $770-780/t CFR basis which was around $760/t CFR basis to Vietnam last week. Meanwhile, mills are eyeing around $800/t CFR UAE and $880/t CFR for Europe. Thus, higher realizations in exports are motivating mills to raise prices in the domestic market. Also, mills are comfortable doing business in exports and are under no pressure to sell material to domestic markets.
2. Costlier HRC imports- Major exporting nations mainly Japan, China, and South Korea are offering HRC on the higher side. Major Chinese steel mills are offering around $760/t FoB, meanwhile Japanese and Korean mills are offering at around $780-790/t FoB basis Thus, imports are not viable to India at the moment. Also Indian Govt. has reduced custom duty on steel imports to 7.5 % from 12.5%, in the Budget. However, the duty cut didn’t result in cost-effective imports due to higher offers and a longer delivery period. Thus, stockists have to procure the material domestically. This factor may drive HRC prices in the domestic market.
3. Improved demand in white goods sector- As per market reports, there is a healthy trend in consumer durables demand, with optimism that air- conditioner (AC) sales will pick-up with the onset of the summer season. The surge in stocks has been sharper with Bajaj Electricals Blue Star, Havells India, Voltas, and Whirlpool. Thus there is the possibility of a price hike in consumer durables as retail sales are expected to pick up strongly.
Prices in the trade market- As of week 12 of the CY 2021, SteelMint’s benchmark prices for 2.5mm thickness HRC is range-bound at INR 54,000-54,500/t (exy-Mumbai).
Near term outlook- Indian steel mills are trying to ease out the inventories before the financial year-end. Mills are majorly focusing to achieve their production and sales guidance by the end of FY’21, post which mills will soon announce a steep hike in domestic HRC prices for April deliveries.
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