Indian flat steel prices have remained stable in domestic market since past couple of weeks after witnessing increase of INR 1500/MT (USD 23/MT) in the start of Feb’18 amid tight supply and improved demand in domestic market.
However supply constraint still remains the issue for major Indian manufactures in domestic market.Thus demand supply mismatch may push Indian flat steel prices further by INR 1000-1500/MT in Mar’18. However will the price hike be absorbed by the market remains a big question.
Which all factors may lead to hike in flat steel prices?
1.Supply constraints amid maintenance shutdown at few mills-As SteelMint mentioned before that Tata Steel Kalinganagar plant is facing technical issue in their integrated blast furnace, Steel Melting Shop (SMS) and Hot Strip Mill (HSM) which lead to temporary shutdown of mill on 29 Jan’18. The repair work has been started and company will resume their operations by 23rd or 24th of Feb ‘18. However actual production will come up from March.
2. Landed cost of imported HRC higher than domestic prices-Landed cost of Chinese HRC imports to India is costlier by around INR 2,000-2,500/MT than domestic prices in India.And HRC imports from Japan and South Korea is expensive by INR 800-1000/MT compared with Indian domestic HRC prices.Thus imports will not be viable from these countries to India.However domestic flat steel prices are still trading at a discount compared to imported prices, providing enough scope for the Indian steel manufacturers to raise the prices further in domestic market.
3.Higher global flat steel prices– Global flat steel prices continue to remain on higher side. HRC export offers from CIS nations have moved up by USD 10/MT W-o-W. Also HRC export offers from Japan and South Korea are also heard in range of USD 630-635/MT FoB basis. Indian HRC export offers assessed at USD 595/MT FoB India in the month of Jan’18 which has reached to USD 630-650/MT FoB basis in Feb’18 ,up by 7%, M-o-M basis. Thus higher global prices triggers the prices of flat steel in domestic market.
4. Increased Consumption from Automobile Sector-As per SIAM ( Society of Indian Automobile Manufactures, reported the growth of commercial vehicle segment by 18.8% , Medium & Heavy Commercial vehicles increased by 11.6% and light commercial vehicles grew by 22.8% on yearly basis in Jan’18 as compared to similar time period of previous year.
Meanwhile in Jan ‘18 the two-wheeler segment like scooter moved up by 48.3%,motorcycles grew by 28% and mopeds rises by 10% respectively against the same month of previous year.
Currently trade reference prices (basic) for HRC (IS2062) 2.5 mm-8 mm are assessed at INR 44,000/MT (ex-Mumbai), INR 44,500/MT (ex-Delhi),INR 44,500MT (ex-Chennai).The prices mentioned above are basic prices excluding GST @ 18%.
Trade reference prices (basic) for CRC (IS513) 0.9mm is hovering in the range of INR 48,000-48,500/MT (ex-Mumbai) INR 48,500-49,000/MT (ex-Delhi) and INR 48,000-48,500/MT (ex-Chennai).The prices mentioned above are basic prices excluding GST@18%
However few trade sources reported higher domestic prices has lead to slow buying in domestic market.Thus the question remains that – Will further hike in domestic flat steel prices be absorbed by the market or not ?
Leave a Reply