India: Mills raise HRC, CRC prices by upto INR 2,500/t ($33/t)

Indian steel behemoths raised hot rolled (HR) and cold rolled (CR) steel prices by a significant INR 2,500/tonne (t) ($33/t) for early March sales in the domestic market.

Trade channel sources said, these announcements have come on the back of the higher realisations in the overseas markets and an upsurge in prices of steel-making raw materials.

Post-hike, the effective list prices from the mills stand at following levels:

JSW: HRC at INR 70,500-71,000/t ($925-932/t) and CRC at INR 76,000-76,500/t ($998-1,004/t).

Tata Steel: HRC at INR 69,500-70,000/t ($) and CRC at INR 76,000-76,500/t ($998-1,004/t).

AMNS India: HRC at INR 68,000-69,000/t ($893-906/t) and CRC at INR 74,000-74,500/t ($971-978/t).

SAIL: HRC at INR 68,000-68,500/t ($893-899/t) and CRC at INR 73,500-74,500/t ($965-978/t)

Prices mentioned above are on an exy-Mumbai basis, and exclusive of GST @ 18%.

Major factors behind the price hike:

1. Improved export demand, offers: Major HRC importing countries have shown an increase in demand, especially Europe. The ongoing geo-political tensions between Russia and Ukraine have led to supply-side disruptions from the warring countries in the Black Sea region. Furthermore, supplies to European countries from Russia and Ukraine are going to be limited for sometime even after the situation cools down. This has opened opportunities for increased exports from India and mills are making the most of it. Since mid-February, three deals in HRC exports have been concluded with European countries for April deliveries, and each at an elevated level from the other. For instance, the first deal was sealed at $965-967/t CFR, followed by $1,020-1,025/t CFR, and the latest, at $1,060/t CFR, after which fresh offers are being heard at around $1,100/t CFR.

Moreover, industry participants opine that the traditional markets of Vietnam and Middle East will come along as export offers from other countries are on the rise as well. For instance, a couple of export deals from China to Vietnam were concluded in the past seven days, each for 20,000 t of HRCs at $860/t CFR and $900/t CFR respectively. Fresh Chinese HRC offers stand around $910-920/t CFR Vietnam.

2. Increasing costs of raw materials: The prices of raw materials are another major factor. The average monthly prices of Australian-origin premium hard coking coal coal are at historic highs of $531/t CNF Paradip India as assessed on 4 Mar'22. Moreover, on an average monthly basis, the prices spiked to $467/t CNF in Feb'22 contrasted against $426/t CNF in Jan'22 and $361/t CNF in Dec'21. This is having a significant impact on the steel making cost.

3. Improvement in domestic restocking: Trade market activities picked up recently as distribution network participants rushed out to restock anticipating significant hike in prices in March. It is also to be noted that much of the distribution channel had been working on lean inventories since Nov'21 as prices went into correction. Prices tumbled from INR 72,100/t ($949/t) exy-Mumbai in early Nov'21 to INR 63,100/t ($830/t) towards the end of Dec'21, marred by subdued demand and low confidence in restocking by the trade channels.

India's industrial production (IIP) fell to 0.4% in Dec'21 from 1.3% in the previous month (Nov'21). According to official data, this was the slowest growth in 10 months.

4. Expectation of demand recovery from end-user industries: "End-user demand has been on a tight leash with need-based procurement taking place since November last year. This trend is likely to change its course," said a few reliable industry participants, based on expectations that the white goods and automobile industries will see a rebound in demand. In fact, January's total vehicle production has already improved to 18.61 lakh units against Nov-Dec'21's around 16 lakh units. The easing in semi-conductor chip shortage will not only boost demand from the above mentioned segments but also from allied industries such as heavy engineering and fabrications.

Near-term outlook: Due to the ongoing geopolitical tensions, several countries will face disruptions in imports from Russia. Indian mills are quite bullish on capitalising on this by strengthening their presence in existing overseas markets and also exploring new geographies for exports. This will keep the domestic market bullish in the short to medium term.