Indian steelmakers are eyeing for a substantial hike in domestic flat steel prices for Jan’21 deliveries. Tight supplies and robust demand in the domestic market are the factors which may result in hike in steel prices. Tata Steel has already made the official price hike announcement and others are likely to follow the suit, sources reported to SteelMint.
Effective list prices of mills-
- AM/NS India increased HRC list prices on 29th Dec’20 by INR 1,000/t and CRC prices by INR 1,500/t.Effective prices of HRC stands at INR 52,750/t and CRC at INR 63,000-63,750/t.
- Tata Steel India has today raised HRC prices by INR 5,000/t and CRC by INR 6,000/t. Effective prices of HRC stand at INR 56,000/t and CRC by INR 67,000/t
- Prices are on exy-Mumbai basis exclusive of GST @18%
It can be recalled that in Dec, mills announced four price hikes. The first hike was made by around INR 2,000/t, the second hike by INR 1,000-1,500/t and the third hike by INR 1,000-1,500/t in Dec’20, and the fourth hike by around INR 1,500-2,500/t
The domestic flat steel market continues to remain strong due to :
1. Inflated demand from OEM’s- Major Indian steel mills are delaying supplies due to lower availability of material. Inflated demand from OEM’s has resulted in bulk orders with the mills. “Demand from OEM’s has increased by around 20-25% and this inflated demand resulted in the shortage in the trade market”, shared by Mumbai based distributor. Thus supplies continue to remain under pressure in the traders market and turn resulted in a significant hike in a trade
2. Export bookings- Market sources shared with SteelMint that major steel mill based in southern India have made their export bookings for Feb’21 shipments. Further mills will resume their export orders for March shipments. Mills have mainly exported HRC to Europe on higher price realizations as compared to domestic prices. The last offers were heard to be around $775-800/t CFR basis. Increased export offers prompted mills to raise domestic prices.
3. Boost in auto and consumer goods demand- The passenger vehicle industry in India is set to record its fifth straight month of double-digit sales growth in December. Dealerships have reported strong sales in the first 20 days of this month, SteelMint learned from market reports. Also with the arrival of the COVID vaccine consumer durable demand is expected to remain optimistic.
Prices in the trade segment-As per SteelMint’s benchmark price assessment, domestic HRC prices stood at INR 54,500-56,000/t and CRC prices at INR 64,500-65,000/t (exy-Mumbai).Prices mentioned are basic and GST @18% is applicable.
Will this price trend continue in Jan ’21 ?
Few market participants shared with SteelMint that,” We are hopeful of price decline in mid of Jan. Also OEM’s and vendors are feeling the pinch of unbearable pressure of steep hike in prices. Also, the Indian government may intervene because infrastructure cost is up by 20-25% and a steep surge in the cost of govt projects”.