Are Indian Major Mills Planning for Another Price Hike in Finished Steel ?
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According to trade sources report to SteelMint, Indian major mills are looking to further increase in long steel prices by INR 500-700/MT (USD 7-10) in the next week or towards end of the month. Flat steel prices may rise by around INR 1,000/MT. Major producers like - RINL, SAIL and JSW Steel have already raised long steel prices by INR 1,000-2,000/MT in early Sep'18. Although, the market participants believe there is still room for further rise in prices.
As per industry players following are the reasons behind indications of price rise:
Rally in prices by medium mills: The most important reason is significant rise in rebar prices in secondary market since the starting of the Aug'18 to till date. The prices of medium/small scale mills have increased about INR 5,000-5,500/MT in Mumbai, INR 3,500-4,000/MT Chennai and Hyderabad & INR 4,000-4,500/MT Delhi/NCR. However in the same duration price hike by the large mills was upto INR 2,500/MT.
Low inventories: As per sources report to SteelMint, most of the large mills having limited stock of long steels on account of low production & decent export booking in the previous month. Industry leaders also believe that there is anticipation of pick up in construction industry led to strong domestic demand.
Rising input cost: Large mills are also facing cost pressure on the continuous rise in raw materials i.e. iron ore and cooking coal. For instance, the major miners in Odisha & state run-NMDC, which is India's largest iron ore miner have increased prices on high pellet export realizations.
Coking coal (Premium HCC) prices which was about USD 170/MT during Jul-Aug'18, currently trading at USD 223/MT CNF India.
Narrowed price gap: The price gap in rebar between the large mills & medium/small scale mills narrowed down with the continuous rise in prices by medium mills.
Costlier imports : Rupee depreciation against USD has turned imports costlier. Exchange rate currently stands at 72.04 against 70.3 a month ago. Indian flat steel imports have turned costly and few bookings of HRC were reported from South Korea so far this month.
