Indian mills lift HRC, CRC prices on higher global offers

Domestic HRC and CRC prices continue to remain discounted as compared to international rates. Indian mills are aiming to reduce the gap between international and domestic pricing. Mills have lifted local HRC and CRC prices sharply.

Recent hike by major Indian steel mills

• JSW Steel announced a second hike in its list price of HRC and CRC at the beginning of this week by around INR 1,750-2,000/t. The revised list price of HRC stood at INR 66,750-67,000/t and CRC at INR 82,500-83,000/t.
  
  
• AM/NS India announced its second hike on 20 May’21 in its list prices of HRC by INR 1,000/t and CRC prices by INR 2,000/t. Effective prices of HRC stood at INR 68,000-68,500/t and CRC prices at INR 82,000-82,500/t.
  
  
• Prices are on exy-Mumbai basis, excluding GST @ 18%.
  
  

But, domestic steel prices are still lower by INR 14,000/t against Indian HRC export offers which stood at around $1,100/t CFR Vietnam for June-July shipments.

Why mills announced the second prices hike?

1.Higher export orders lead to short supply in trades segment:Mills have shifted their interest to HRC exports, mainly to Vietnam, UAE and Europe.Indian bulk HRC export shipments in Apr '21, amounting to 3,49,388 tonnes (t), jumped 74% year-on-year (y-o-y) as compared to 20,000 t seen a year ago, as per data maintained with SteelMint.

Because of higher export orders, mills are unable to supply HRC to the trade segment. "Many private mills have restricted their supplies since the beginning of May", SteelMint learnt from trade sources.

2.Strong global demand:Optimistic demand in Vietnam, UAE, and Europe motivated mills to raise HRC export offers in global markets. Currently, Indian mills are offering HRC to Vietnam and UAE at around $1,100/t CFR basis for June-July shipments. Few deals were reported to have been booked at $1,070-1,080/t CFR Vietnam. However, mills are unable to export HRC to Europe currently due to exhausted quotas.SteelMint's Indian HRC (SAE 1006) export index stands at $1,057/tonne (t) FoB east-coast basis, up $19/t week-on-week (w-o-w) against $1,038/t FoB seen in the last week.

3.Europe: ArcelorMittal to raise flat steel prices by �,�50/t:Europe’s leading steel manufacturer,ArcelorMittal, is planning to announce a hike in its flat steel prices by Euro50/t ($61).HRC offers are at Euro1,150/t ($1,400)and CRC and hot-dipped galvanized coils are at Euro1,300/t ($1,583).The latest hike is the company’s third in May’21. Thus, higher domestic prices in Europe resulted in increased HRC export offers from India. Mills have exported few quantities of CRCs to Europe at $1,400/t CFR Antwerp.

Domestic demand remain subdued
However on the other hand, domestic demand has remained subdued.The lockdowns and increased rate of infections impacted domestic demand across auto and consumer durable sectors which led to a fall in consumption in Apr '21.Indian domestic steel consumption was 6.72 mn t in Apr ’21, down by 26% m-o-m against 9.05 mn t in Mar ’21, as per provisional data released by the Joint Plant Committee (JPC). Traders in a few regions have reported negative sales this month on extended lockdowns in various states.

This week, SteelMint’s benchmark prices for 2.5mm thickness hot-rolled coils (HRC) stand at INR 65,000-66,000/t (exy-Mumbai) against INR 66,000-67,000/t last week. The prices mentioned do not include GST @18%.

*Prices mentioned above are as per SteelMint HRC price methodology 

Will higher prices sustain in the market?
Chinese futures have fallen sharply since the last few days. SHFE HRC futures Oct'21 contracts closed at RMB 5,555/t ($863) (-RMB 123) today. This has led to a fall in export offers from China. Rizhao Steel Mill has decreased its HRC exports offers by around $50 to $1,040/t CFR Vietnam and $1,060/t CFR UAE. This factor may hurt Indian HRC export offers and domestic prices in the near term.