Indian steel mills may raise HRC list prices by up to 1,500/t for Oct'24 sales

The tier-I steel mills may announce an increase in their list prices of hot-rolled coils (HRCs) and cold-rolled coils (CRCs) by INR 500-1,500/tonne (t) ($6-18/t) for the October 2024 sales. he increase in raw material and global prices is among the leading reasons for the likely price hike, hinted industry sources.

List prices of HRCs (2.5-8 mm, IS2062, Gr E250, Br.) stood at INR 47,000-50,000/t ($559-595/t)exy-Mumbai, while CRCs (0.9 mm, IS513 CR1) hovered at around INR 53,000-57,000/t ($631-678/t). The same could not be confirmed at mills' end. These prices exclude GST of 18%.

Factors behind price increase by mills

Mixed trends in raw material costs: Australian premium HCC coking coal prices declined 9% m-o-m to $200/t CFR India in September 2024. Weak steel sentiment, increased Australian shipments, and falling futures contributed to the price drop. Domestic met coke prices also decreased, impacting bids for merchant cokeries.

Fines & lumps prices from Odisha saw mixed movements. Fe62% fines rose 1% to INR 4,350/t($52/t), while Fe63% lumps fell 1% to INR 5,730/t ($68/t). The marginal changes were influenced by OMC's auction and rising sponge iron prices. India's iron ore output declined to a year's low in August due to monsoon disruptions.

Domestic trade-level prices increase: The current state of the trade market reflects persistent sluggishness, largely attributable to diminished demand. Concurrently, market participants are observed to be ramping up their offers, citing increase in mills' list prices. Nevertheless, buyers are demonstrating a propensity to negotiate prices below the listed levels, opting for smaller-scale purchases based on immediate requirements.

"Buyers are purchasing only what they need in smaller quantities and pushing for lower prices despite sellers' attempts to raise offers. It needs to be seen if the increase in prices can be absorbed by the market or not," observed a market participant. "However, mills have implemented price increases, and rumours suggest further hikes are possible next month. This aggressive pricing strategy could be dangerous, as it might incentivise a return of import activity," he added.

Increased imports: As per BigMint's vessel line-up data, the cumulative import volume for September 2024 touched 7,76,835 t. It was 627,426 t in August, and 636,651 t July 2024. An additional 246,902 t is expected to arrive in October.

Weak export market: India's exports of HRCs were low because of competition from other sources in regions like Southeast Asia and the Middle East, as well as geopolitical tensions. Anti-dumping investigations in Europe also affected Indian HRC exports to that market.

Weekly price update

BigMint's benchmark assessment prices (bi-weekly) for HRC (IS2062, Gr E250, 2.5-8mm) rose by INR 1,400/t ($17/t) to INR 48,400/t ($576/t) on 4 October 2024 compared to the previous week. Additionally, CRC (IS513, Gr O, 0.9mm) prices rose by INR 700/t ($8/t)to INR 55,800/t ($664/t) during the same period. The prices quoted are exy-Mumbai, excluding 18% GST, and were for cut-to-length (CTL) deliveries.

Outlook

Market prices of flats should improve in October 2024 amid the buying impetus from infrastructure and construction sectors and their ancillaries. Dussehra-Diwali seasonal boost in retails might lend further support to the demand and prices of flat steel products.