India: Trade-level HRC prices on a rise as mills brace for hike in April

Trade-level prices of hot-rolled coils (HRCs) remained strong in most of the markets this week in anticipation of a price hike announcement by mills in April due to rising raw material and coating material costs.

"The increase in prices of raw materials along with zinc, aluminium and other such coating materials has pushed up finished steel product prices over the past couple of months. Moreover, higher realisations from exports of HRCs is another major reason behind the recent hikes by steel mills," shared a few industry participants.

Factors pushing up prices in trade market:

Raw material prices continue to rise: The prices of imported coking coal have scaled new highs since the beginning of Feb'22. The weekly average prices of Australian-origin premium hard coking coal (HCC) had shot up to $700.25/t CNF India in the preceding week, contrasted against $667.50/t CNF a week back. However, prices dipped a bit to 648/t as of the current week. Also, on a monthly comparison, the average prices for March (until 24 March'22) stand at around $630.79/t CNF, significantly up by $164/t (35%) against $467/t CNF in Feb'22, and $205/t (48%) compared with $426.33/t CNF in Jan'22. Moreover, daily prices reached $704/t CNF on 15 Mar'22 after which the same started a gradual descent to $618/t CNF as assessed on 24 Mar'22.

Export realisations remain high, mills seek bookings for May shipments: Realisations from exports of HRCs have skyrocketed in the last couple of months. For instance, in mid-Jan'22, Indian HRC export offers to Europe stood at around $860-880/t CFR for end-February or March shipments, and now the same stands around $1,300/t CFR for May shipments. During the months of Feb-Mar'22, quite a few HRC export deals were concluded for the EU region with offers rising with each successive booking. Also, most of the steel producers are holding decent volumes in their export order books until Apr'22 and are now eyeing May shipments.

Near-term outlook:
Mills are likely to announce further hike of around INR 2,000-3,000/t in the first week of April, SteelMint understands from conversations with distribution network participants. However, absorption of price hikes in the trade segment amidst the prevalent need-based procurement scenario is a major challenge; as the end-user industry is struggling to pass on the costs to end consumers.