India: HRC trade prices may rise further as major mills expected to raise prices for Jan'23

Trade prices of hot-rolled coil (HRC) have been on a rise for the second consecutive week. The current week's price assessment shows an increase of INR 800/t ($10) in the Mumbai market. Mills are eyeing a prices for January 2023 sales, which has kept trade segment prices buoyant.

SteelMint's weekly assessment for HRC stood at INR 54,000-55,000/t ($652-664), up by INR 800/t ($10), while CRC was rangebound at INR 59,000-60,000/t ($713-725). However, average HRC trade prices have dropped by INR 2,000/t ($24) m-o-m to INR 54,000/t ($652) in December as against INR 56,000/t ($677) in November.

All the prices mentioned above are on exy-Mumbai basis, excluding GST @ 18%. (INR 1 = USD 0.0120805, USD 1 = INR 82.7782)

Factors supporting trade prices:

1. PSU major increases HRC, CRC list prices: PSU steel major Steel Authority of India Limited (SAIL) increased its HRC and CRC prices by INR 500/t ($6) with effect from 27 December, 2022. Subsequent to the announcement HRC (IS2062, 2.5-8mm) list prices stand at INR 55,500-56,000/t ($670-677), while CRC (IS513 Gr O, 0.9mm) is at INR 61,500/t ($743). Prices are on ex-Mumbai basis, excluding GST at 18%. Also, both private and state-owned mills are likely to raise list prices for January, as per sources.

2. Imports turning costlier: Prices of HRC on the global trade platform have been on a rise over the last couple of weeks. The landed cost of imported HRC from FTA countries was at a discount of around INR 8,300/t ($100) in November, which has dropped to INR 2,600/t ($31) in December.

Furthermore, due to currency fluctuations higher payments often have to be made for imports. For instance, in November (average), 1 USD was trading at INR 81.612, which in December is around INR 82.347. A point to note is that the December average is computed for 28 days in line with the date of assessment i.e. 28 December, 2022.

3. Exports showing signs of recovery: Indian mills had taken a backseat amid the 15% export duty announced on non-alloyed flat steel on 21 May, 2022. Monthly HRC export volumes have stayed lower in the June-November period compared with May. However, subsequent to the removal of duty on 19 November volumes have started showing an increase. For instance, bulk HRC export volumes have increased to 254,016 t in December, higher by 36.1% against 186,672 t in November, as per vessel line up data maintained with SteelMint.

SteelMint's HRC (SAE1006) export index stands unchanged at $597/t FOB east coast as mills had withdrawn offers for Vietnam and the Middle East this week. Last week, the index had increased by $37/t. Mills are likely to quote fresh offers in the first week of January, as per sources.

Near-term outlook: Trade prices are likely increase in the near term amid expectations of price hikes by the primary mills and a general improvement in demand. Mills are likely to increase their January list prices by about INR 1,000-2,000/t, distribution network participants hinted. However, mills are yet to make any official announcement.