India: Mills to increase flat steel prices, markets follow uptrend

The Indian steel majors had increased their list prices for hot rolled coils (HRCs) and cold rolled coils (CRCs) towards the end of Jan'22 by about INR 500-1,000/t ($7-13/t) after which AM/NS took a hike of INR 1,250/t ($17/t) for HRCs and INR 1,000/t ($13/t) in CRC for early Feb'22 sales effective from 1 Feb'22.

Other mills are likely to increase their prices in the upcoming days.

AM/NSI's effective list prices for HRC now stand at around INR 66,000-67,000/t ($881-895/t) whereas for CRC, these are at INR 71,750-72,750/t ($958-972/t) with effect from 1 Feb'22. Prices mentioned are on an exy-Mumbai basis, exclusive of GST @18%.

Following the hike, the trade reference prices of India's hot-rolled coils (HRC) in the key markets increased by INR 700-2,000/t ($9-27/t).

The increase in list prices by mills is likely backed by the following factors

1. Export offers rise with deals at higher price levels: Indian steel manufacturers increased their HRC export offers by around $10-15/t this week after a hike of $15-25/t in the preceding week. With this, SteelMint's India HRC (SAE1006) export index spiked up to $800/t FOB east coast, up by $20/t w-o-w. It had spiked by $78/t to $722/t in the first week of Jan'22. Furthermore, mills are enjoying good export volumes in their order books till Feb'22 and are now offering for March shipments.

2. Rising raw material prices: The increase in raw material prices is among the major factors impacting the cost of production in different ways. For instance, the weekly average prices of Australian-origin premium hard coking coal (HCC) spiked by $90/t to $464/t CFR Paradip, India this week contrasted against $374/t CFR at the beginning of Jan'22. However, on a weekly basis, these are largly stable against $464/t.

3. Demand to improve from end-user industries: The demand from manufacturing industries such as automobiles and white goods is anticipated to improve in the coming months. The Indian automobile giant Maruti reported production of passenger vehicles (PV) and light commercial vehicles (LCV) at 161,383 units in Jan'22, up by 6.15% against 152,029 units in Dec'21 and a marginal increase from 160,975 units in Jan'21. Furthermore, demand from white good industries too is likely to improve with an increase in demand for cooling and refrigeration equipment with the approaching summer.