India:Domestic HRC trade price increases on demand recovery

Indian HRC trade prices reported a sharp increase of around INR 1500-2000/t especially in Northern India including Faridabad, Ludhiana and Delhi. In other markets trade prices of HRC increased by around INR 750-1000/t. Meanwhile, as per SteelMint benchmark price assessment for 2.5mm thickness, HRC increased by INR 250/t INR 54,000-54,500/t (exy-Mumbai) w-o-w.

*Prices mentioned above are as per SteelMint HRC price methodology

Why are we observing an uptick in HRC prices ?

1.Trades picked up on rebound in demand- "Trade participants mainly from the northern and western region shared that demand is picking up, Sales are good as compared to last week and buyers have accepted these prices", SteelMint understands from major HRC distributors. Buyers have resumed active buying in expectation of further increases in prices. In Feb '21, finished steel consumption at 9.126 mn t reported an increase of 7% annually against 8.551 mn t in Feb '20, according to provisional data released by JPC (Joint Plant Committee)

2.SIAM echoing positive sentiments from the auto sector: According to the data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales were at 281,380 units in Feb'21 as compared to 238,622 units in Feb'20, marking a growth of 17.92%. Two-wheeler sales were at 1,426,865 units in Feb'21, compared to 1,294,787 units in Feb'20, registering a growth of 10.20%.

Commenting on the Feb'21 data, Mr. Rajesh Menon, Director General, SIAM said "In Feb'21, 2.81 Lakhs Passenger Vehicles were sold, clocking a CAGR growth of 3.29% over the previous highest sales in February, in the year 2018 of 2.55 Lakhs, while in February 2020 the total sales were 2.39 Lakhs."

3.Limited allocation for thinner gauge HRC- Major steel mills were quite active in the export market for the last few days and have booked significant volumes of HRC in the global market. Due to this, traders are facing a shortage of thinner gauge HRC in domestic market.Thus, the domestic market expects the prices to be on the higher side in the near term.

Indian steel mill predominantly targeting export market:

• Indian steel mills are predominantly targeting the export market with twin objectives of tackling the subdued domestic demand and maintaining healthy sales realization as FY'21 is coming to an end.
  
  
• Indian steel mills have managed to conclude HRC export deals at increased offers of $735-740/t CFR Vietnam. Meanwhile, mills are eyeing to increase offers by $5-10 to $745-750/t CFR against last deals for April-end May shipments.
  
  
• Indian bulk HRC export shipments rose by 7% in Feb '21 aggregating to 2,83,507 t against 2,65,622 t in Jan '21, as per the data maintained with SteelMint.
  
  

Near-term outlook- Indian mills are bullish on the domestic market and are expecting domestic HRC prices to improve further in the near term in line with changing situations in the international market. Also, mills have cushioned themselves by exploring export avenues at competitive pricing. Major steelmakers are planning to revise Domestic HRC price revision is under discussion among major steelmakers and it will be announced shortly.