Steel mills have raised rates by up to Rs 4,500 per tonne from the starting of the month taking the benchmark hot rolled coil (HRC) value in the Mumbai marketplace to a record higher of almost Rs 68,000 per tonne.
Despite anaemic domestic demand mostly due to lockdown and restrictions on mobility, the value hike is primarily to align with the international rates, which have gone up continually in current instances thanks to China limiting its exports.
“With Japan and CIS, HRC export prices crossing $1000/tonne, landed prices into India now stand between Rs 80,000 and Rs 83,000/tonne with little availability. Indian mills are quoting above $970/tonne for their exports which translates into mill level realisations of Rs 71,000/tonne. Trade level domestic HRC prices are near Rs 65,000/tonne,” J P Morgan mentioned in an April 28 note.
It mentioned Indian mills hiked domestic spot HRC rates by Rs 7,000/tonne in April and saw a powerful possibility of mills hiking domestic HRC rates by up to Rs 7,000/tonne, spread more than May and June due to a extremely substantial gap among mill level domestic and marketplace rates.
“Domestic steel prices at present are at the all-time high levels, after the latest increase. The prime driver of this increase seems to be the buoyancy in international steel prices. Despite the latest increase, domestic prices are at a 8-9% discount over the landed cost of imported steel, which is likely to enable players to hold on to price levels in the near-term, unless international prices correct significantly,” mentioned Jayanta Roy, senior VP, Icra.
Roy mentioned the ongoing second wave of the coronavirus tends to make demand outlook somewhat uncertain in the initial half of FY22 though exports stay a viable option out there to top steel makers in India.
A prominent steel organization, requesting anonymity, mentioned even immediately after the newest hike, domestic steel rates are trading at a discount of Rs 8,000 per tonne to the landed expense of imports.
“This implies there is room for further hikes. Steel mills could increase prices by Rs 2,000-4,000 per tonne with another hike likely in mid-May or early June,” it mentioned.
During the fiscal year 2020-21, export of completed steel from India, at 10.79 million tonne (MT), was larger by 29.1% as compared to export through 2019-20. Imports at 4.75 MT was reduced by 29.8% more than the very same period.
In March alone, exports and imports enhanced by 125.7% and 33.3%, respectively more than the corresponding month last year. Month-on-month, exports and imports enhanced by 97.4% and 8.9%, respectively in March, 2021. India docked 63% of exports in March to Italy, Spain, Belgium and Hong Kong.