Indian HRC trade prices rebound on resumed buying

Domestic HRC trade prices increased this week as traders resumed buying in anticipation of an increase in prices in Aug'21.

SteelMint's benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRC) increased by INR 1,400/t to INR 65,000-66,000/t exy-Mumbai as compared to INR 64,000-65,000/t seen a week ago. The prices mentioned above are exclusive of GST @18%.

Factors driving domestic HRC prices:

1. Better realisations in exports may lift domestic prices- Last week, Indian mills exported over 30,000 t of HRCs to South Korea at $970/t CFR basis. Offers to the UAE were heard to be at around $970/t CFR and to Turkey at $955-960/t CFR. Offers to Vietnam were at, $930-935/t CFR basis. However, Vietnam is under lockdown for a few days due to Covid but mills are exploring new avenues for exports to compensate for sluggish sales in the domestic market. Thus, decent export bookings may provide enough headroom to Indian mills to raise prices.

2. Lower prospects of price support- Mills booked decent quantities of HRC for exports amid sluggish sales in July, pushing them to focus on overseas sales over domestic. Thus, they are less likely to offer rebates or price support in Aug since increased exports offset the lower sales in the domestic market.

"Recently, one of the major steel mills based in western India withdrew its rebate offered in July," a reliable source informed SteelMint .

3. Chinese export tax hopes push up offers- The market buzz around the official announcement on the export tax levy gained more traction in the past couple of weeks and eventually sent prices scaling up. Chinese HRC (SS400) export offers shot up to $950-1,000/t FoB China contrasted against $940-950/t FoB a week back.

4. Traders resume buying in anticipation of price hike- Market buzz on the announcement of an export tax from China along with higher export offers resulted in resumed buying among traders who adopted a wait-and-watch stance and were waiting for clear market directions. Traders are trying to procure HRCs to maintain decent inventories before the mills announce a price hike in the domestic market in Aug. Thus, resumed buying led to increased prices in the trade segment.

Will mills hike prices in Aug'21?
According to the factors mentioned above, there is a potential that mills may increase prices in Aug by INR 500-1,000/t or they can announce a rollover to escalate buying in the domestic market. But there is limited chance of price correction due to increased HRC export bookings from India.