Indian mills announce 2nd price hike in HRC for Nov'20 deliveries

Major Indian steel mills have announced a second price hike in Nov'20 by INR 750/t on the back of higher iron ore prices and improved demand in the domestic trade market. JSW Steel and AM/NS have already released new price lists meanwhile SAIL and Tata steel are expected to follow the trend.

• JSW Steel is offering HRC (IS 2062 2.5 - 8 mm) at INR 44,750 - 45,000/t and CRC (0.9mm, IS 513) at INR 54,150/t (exy-Mumbai)
  
  
• AM/NS India is offering CRC prices by INR 750/t and offering at INR 54,000/t (exy-Mumbai)
  
  
• Prices do not include GST @18%
  
  

In the beginning of the month integrated steel mills had announced a steep hike in prices of HRC and CRC prices by INR 1,000-1,250/t for Nov deliveries due to improved auto demand along with short supply hovering in the trade market.

HRC & CRC price rally continues due to following reasons:

1.Indian iron ore fines price hits record high on tighter domestic supplies- India's state-owned iron ore miner - National Mineral Development Corporation (NMDC) has announced the 2nd price hike of iron ore for this month. Prices have increased further upto 11%.

The miner has raised the price for Baila fines and lump by INR 300 and INR 400 respectively while that of DR CLO by INR 460/t. After price revision company's fines price has hit an all-time high while that of lumps are hovering close to five-year high levels.

The Odisha government has "successfully"auctioned16 iron ore mines earlier this year. However, as on Sep'20 only 7, of the 16 mines auctioned, have been able to start production. Two bidders are unlikely to sign leases and three auctioned mines are subject of legal dispute.

2.Robust demand in the auto sector - Passenger vehicle sales stood at 3,10,294 units in Oct'20 which was around 1,05,617 units in Jun'20, As per SIAM data.

Also, auto loan interest rates are below 8%, the lowest in a decade and that should encourage customers to purchase new vehicles.

As per media reports most of the automakers and their part suppliers in India, have already started the process of localizing the components currently imported from China under, PLI scheme initiative by the union government to promote India as a manufacturing hub for automobiles and related components.

3.Absence of cost-effective imports- Stockists and importers are not interested in importing HRC and CRC on higher global prices. Also domestic prices are coming at par with the landed cost of imports. Thus traders have to procure the material domestically, leading to hike in the prices in the domestic market.

Prices in trade segment: SteelMint's benchmark price for HRC (IS2062 2.5-8mm) stood at INR 46,000-47,000 /t (exy-Mumbai) and CRC (0.9 mm GR) is around INR INR 54,500-55,000/t (exy-Mumbai). Prices do not include GST extra @18%.

Optimistic steel outlook for Dec- Tight supplies and improved demand will continue to drive domestic HRC and CRC prices in the trade segment. Meanwhile, market sources shared that Nov - March is considered to be the peak season for Indian steel sector. In addition to this, mills are likely to further increase prices in the beginning of Dec'20.