India: Mills likely to increase coated steel list prices by INR 750-1000/t ($9-13) for end-Sep sales

Indian coated steel manufacturers are indicating a mid-term hike in prices of up to INR 750-1,000/t ($9-13/t) for end-September sales. An official announcement is expected soon. This has lent support to trade level prices, as distributors and traders have refrained from reducing their offers.

This week's trade prices for galvanised coils (GP, 0.8mm, 120gsm) remained at INR 67,000-68,000/t ($841-853/t), while pre-painted galvanised iron coils (PPGI, 0.5mm, 90gsm) prices were assessed at INR 76,000-77,000/t ($954-966/t). Prices are on exy-Mumbai basis and exclude GST at 18%.

Why are mills looking forward to price hike?

1. Anticipation of healthy festive buying: Galvanised steel is mostly used by the automotive, white goods and construction sectors, which is likely to see an uptick in demand on the eve of the festive season. Automobile production has seen continual growth since May. In August, the number of automobiles produced moved up by 3.5% m-o-m at 2,275,407 units, as per data released by the Society of Indian Automobile Manufacturers (SIAM).

Furthermore, appliances and consumer durables producers are looking for up to 35% growth in sales during this festive season. This comes on the back of increasing demand for premium products and price hikes of input materials. The end-consumer demand is likely to pick up and there shall be an upward trend in sales this festival season, said Eric Braganza, President, Consumer Electronics and Appliances Manufacturers Association (CEAMA).

"We have seen improvement in production volumes of automobiles over the past few months, whereas white goods sales also witnessed a demand pull. This has led to improved procurement from these segements," shared sources.

However, demand from a few industrial segments like PEBs and other construction projects have seen some defferment amid seasonal concerns. These segments shall come around with requirement before project activities start picking up pace.

2. Prices of feedstock CRC likely to rise: Steel manufacturers are likely to increase their list prices across the flat steel products portfolio.

Furthermore, two of the major steel producers have already announced an increase of INR 500/t ($6/t) in their HRC list prices earlier this week. Post the annonucement, list prices of HRC (IS2062, 2.5-8mm) stand at around INR 56,500/t ($709/t) exy-Mumbai, excluding GST at 18%.

This has pulled up trade level prices of HRC by INR 900/t ($11/t) w-o-w, which were assessed at INR 55,500-56,500/t ($696-709/t) on 14 September. However, prices of CRC remained at INR 65,000-66,000/t ($816-828/t).

Also, there are indications of a mid-term increase in upstream product prices. Other mills are likely to follow suit.

3. Restocking to pick up pace: Indian steel mills are shifting their focus back on the domestic market anticipating a pick up in restocking activities. Slow and steady sales of coated steel products since June and limited restocking by distribution network participants over the period have left the market with limited inventories, sources informed SteelMint.

Also, mills are not much active in the exports segement amid slow demand in the overseas markets amid the impact of 15% export duty in effect since end-May 2022. Export offers for HDGI continue to be at around $935-945/t (INR 74,509-75,306/t) FOB west coast India for the past four weeks.

Meanwhile, export volumes witnessed a steep decline since June this year. In May, India's exports of galvanised steel stood at around 250,000 t, dropping to 100,000 t in June, and further to 40,000 t in July. In August, exports dropped further to a mere 20,000 t, as per data maintained with SteelMint.

"We are mostly honouring our contracts with overseas buyers and not engaging much in spot export trades at present," said steel mill sources.

Near-term outlook
Trade-level prices of coated steel products are likely to increase in the near term on the back of improvement in demand from major industrial consumers. Automobile manufacturing has already picked up pace, while demand from segments like construction and PEBs shall come around as monsoons receed. Also, the increase in upstream HRC and CRC prices will boost prices of galvanised and other value-added products.