Indian steel mills increase list prices of HR plates by up to INR 1,000/t for Oct'23

Indian producers of hot-rolled (HR) plates have raised their list prices for October 2023 sales by INR 750-1,000/t m-o-m. Subsequent to the revision, prices now stand at:

The weekly assessed trade-level plate prices have remained range-bound, as per SteelMint assessment on 4 October. Prices of plates (E250, 20-40mm) were assessed in a wider band of INR 62,000-67,000/t exy-Mumbai. The trade level prices stopped declining after touching the average of INR 62,100/t in early July and have since risen gradually. The prices have moved up by around INR 1,300/t against the beginning of September 2023.

Prices of E250, 5-10mm plates stood at INR 58,500-59,500/t exy-Mumbai with the average computed as INR 59,100/t exy-Mumbai. These prices are exclusive of GST at 18%.

Factors that supported a list price increase from mills:

1. Demand-supply dynamics: The demand has improved because of the momentum of government spending and an increase in the speed of activities from the infrastructure, and the energy sectors. For instance, 526 km of national highways were added in August 2023 pulling up the (April-August 2023) cumulative length to 3,196 km, as per the data released by the Ministry of Road Transport and Highways (MoRTH). The length of construction was 284 km more than the 2,912 km constructed during April-August 2022.

In the power generation sector, more additions have been made to the green energy-producing 'Wind Energy / Wind Tower' segment. The installed capacity of wind energy has been boosted by 150 megawatts (MW) m-o-m in August 2023 to 44,089.68 MW, as per the country's Central Electricity Authority. Moreover, around 1,457 MW has already been added since April 2023 (42,868.08 MW). On the other hand, demand from allied industrial manufacturers such as fabricators of heavy machinery also supplements to improve demand apart from those manufacturing components for distribution. Monsoon did have an impact on this segment slowing down the momentum from 574 MW added in June 2023. This shows the demand has been rolling in from these segments since the beginning of the fiscal year.

Demand in the domestic market, however, continued to remain lacklustre, as end-industrial buyers stuck to urgent need-based procurement. Private mills, on the other hand, continued to enjoy better listings from infrastructure, green energy, and other long-term contractual buyers leading to limited allocations (for some materials depending on width and thicknesses) in the traders' market.

2. Rising raw materials rang the bell for mills to raise prices: The increase in prices of raw material were also among the highlighted factors behind the recent price announcement. Primarily the spike in coking coal prices since September has added more to the costs. The weekly average of imported Premium Hard Coking Coal (HCC, Australian Origin) at $345/t CNF Paradip as of the end of September has risen by about $65/t from the first week of September ($280/t CNF). Meanwhile, it was assessed at $349/t CNF on 6 October 2023.

Also, the prices of iron ore fines have risen. The weekly assessed Odisha Iron Ore (Fines 0-10mm, Fe 62%) at INR 53,300/t ex-mines as of 30 September, have increased by INR 800/t since the first week of the month. Moreover, India's largest miner NMDC increased list prices of DR-CLO and iron ore fines by INR 250/t with effect from 1 October 2023. Subsequent to the announcement the list price of DR-CLO stands at INR 6,520/t, and iron ore fines (-10mm, Fe64%) at INR 4,460/t ($54/t) (on FoR basis from Bacheli complex). Prices include royalty, DMF, and NMET charges. with effect from 1 October 2023.