Indian steel mills hike HRC and CRC prices by INR 4,000-4,500/t ($50-60); trade prices touch all time high

Domestic steel prices have continued climbing in FY '22 as well, with most of the country’s steelmakers hiking HRC and CRC prices and indicating more price hikes in store, especially with domestic rates still at a discount to international levels.

SteelMint learnt from a senior official at JSW that the prices have been increased by INR 4000-4500/t for April’21 delivery. The current price stands at around INR 57,500-58,000/t for HRC and 68,500 �" 69,000/t for CRC (exy-Mumbai), exclusive of GST @18%. Industry sources added that AM/NS India and SAIL have also hiked prices by INR 4000/t in Apr '21.

SteelMint's benchmark prices for 2.5mm thickness HRC, stood at an all-time high at INR 60,500-61,000/t (exy-Mumbai). Prices do not include GST extra @18%.

SteelMint expects prices to remain strong in the months ahead on the back of following reasons:

1. Competitive overseas market- On a monthly basis, India's finished steel exports stood at 1.293 mn t in Mar '21, reporting a considerable increase of 97% against 0.655 mn t in Feb '21.SteelMint's Indian HRC (SAE 1006) export index stood at $890/t FoB East-coast basis, up by $63 w-o-w against $827/t FoB. Higher price realizations in exports over domestic sales have propelled Indian mills to raise export offers. Few Indian mills have kept away from offering HRC for exports owing to awaited announcements on Chinese tax rebates and public holiday in China.

2. Healthy Demand for consumer durables- The FMCD industry is hopeful of high demand for consumer durables, especially cooling appliances. In addition to the weather, the rising Covid-19 cases along with the work from home culture is likely to fuel the demand for white goods in the country. "We are expecting a robust demand for cooling appliances in the backdrop of early and hot summers along with pent-up demand as last year was a washout. For the last 3-4 months, we have witnessed a 25% growth in air conditioners and expect the trend to continue and we are aiming to close Q4 registering more than 100% growth (QoQ)," Manish Sharma, President & CEO, Panasonic India and SA.

3. Bullish demand from the automotive industry- The rise in steel prices was one reason for car and bike makers to hike rates of their models from Apr 1. Maruti Suzuki, Hero MotoCorp, Renault, Nissan, Toyota and Ford are some of the companies that hiked prices. But that may not yet dampen demand for cars, with many of the manufacturers running at full capacity and the waiting period for some models stretching into months.

Steel prices in the domestic market have been on an uptrend since July last year and that reflected in steel stocks. The BSE Metal index has gained about 156% in the last one year. On 5th Apr ’21, major steel stocks touched fresh 52 weeks high during market hours with Tata Steel at INR 882.30, JSW Steel at INR 541, Jindal Steel & Power at INR 397 and Steel Authority of India Ltd at INR 93.40 on the Bombay Stock Exchange.

Outlook- The leaders from the Indian steel companies are quite optimistic about the domestic demand scenario. In a recent interview with a leading media company, Ranjan Dhar, chief marketing officer, (AM/NS India) said, the price parity of the world has been changing from last year onwards. “HRC (hot-rolled coil) prices in Europe are inching towards $1,000/t CFR, in West Asia to around $900/t CFR."

The difference between average global price and Indian HRC price is about INR 11,000/t", he added. “We are looking at providing support to MSMEs, but overall, it appears that the market has gone through a structural change,” Dhar further said.

Soma Mondal, Chairman, SAIL said, "Past steel cycles have been very short. Expect this demand momentum to continue for the next 2 years. Not seeing major capacities being added in the world except India, so prices could remain strong."