India: Trade-level HRC, CRC prices up amid restocking

Domestic HRC and CRC trade reference prices witness a spike of around INR 2,500/t and INR 2,800/t respectively in Mumbai. SteelMint's benchmark price assessment for 2.5-8 mm IS 2062 HRC stands at around INR 67,500-68,000/t (exy-Mumbai), while that of CRC (IS 513 Gr O, 0.9mm) at INR 75,000-75,500/t (exy-Mumbai). The prices mentioned exclude GST at 18%.

What has led to this spike?

1. Increase in restocking towards end of last week: Towards the end of last week, the market picked up on trade activities with major distributors and stockists actively topping up on their inventories. The buzz around an impending price hike by the major mills also heated up the market.

"End-user demand is yet to emerge. This increase in market prices has come only on the back of trade channel participants coming out to restock ahead of the mills' price hike announcement," said western India-based distributors.

2. Mills raise prices by around INR 1,500/t for Oct'21: Major Indian steel producers lifted list prices of HRCs and CRCs by INR 1,500/t on the back of rising input costs, which, in turn, will result in higher cost of production. In addition, demand from consumer durables and white goods segment during October-November increases because of the festivities. Thus, mills are pinning hopes on the pent-up festive demand.

Revised prices:

i) SAIL's list prices of HRCs stand at INR 67,500-68,000/t while CRCs are at INR 77,000-77,500/t.
ii) JSW's list prices of HRCs are at INR 67,500-68,000/t while that of CRCs are at INR 77,500-78,000/t.
iii) AM/NS India revised its list price of HRCs to INR 67,500-68,000/t while CRCs are at INR 77,000-77,500/t.
iv) Prices mentioned above are basic, excluding GST at 18%, on an exy-Mumbai basis.

3. Coking coal prices: The continual increase in imported coking coal prices pushed mills to disseminate its impact on production cost in the trade market. With the onset of May this year, prices of Australian premium hard coking coal (HCC) started the ascent from the lows of $128.53/t CNF. Furthermore, this elevated to 425.13/t CNF Paradip by end-Sept'21, significantly up by 75% contrasted against $242.95/t CNF Paradip at the beginning of Aug'21.

Challenges ahead

1. Crippling impact of chip shortage on white and yellow goods: The onset of Durga Puja in India marks the peak season for white goods and automotive sales. Meanwhile, the prolonged disruptions in chip manufacturing and supplies since the concern emerged early in CY'20 has dented production cycles and volumes of major white goods and automobile giants in India.

As per media sources, the auto industry is holding 4.5-5 lakh units as pending orders, while the largest car manufacturer, Maruti Suzuki alone, has about 2.15-2.2 lakh units yet to be delivered. There is a huge demand-supply mismatch, resulting in higher prices and increased delivery time in the automobile segment.

2. Power cuts' impact on downstream sectors: Indian steel manufacturers and downstream industries may have to deal with power outages. Shortage of coal at power generation plants has led to this concern.

"Starting next week there might be power cuts in India as well for high energy-consuming sectors (above 50-100kW) for a certain time period on a daily basis. An official announcement on this is still awaited. This is also keeping prices buoyant in the traders' market," shared a north-India-based distributor.