Steel makers raise prices by up to Rs 4,500 per tonne – The Financial Express

Clipped from: https://www.financialexpress.com/industry/steel-makers-raise-prices-by-up-to-rs-4500-per-tonne/2245856/

Despite anaemic domestic demand primarily due to lockdown and restrictions on mobility, the price hike is mainly to align with the international prices, which have gone up continually in recent times thanks to China limiting its exports.

Roy said the ongoing second wave of the coronavirus makes demand outlook somewhat uncertain in the first half of FY22 while exports remain a viable alternative available to leading steel makers in India.

Steel mills have raised prices by up to Rs 4,500 per tonne from the beginning of the month taking the benchmark hot rolled coil (HRC) price in the Mumbai market to a record high of nearly Rs 68,000 per tonne.

Despite anaemic domestic demand primarily due to lockdown and restrictions on mobility, the price hike is mainly to align with the international prices, which have gone up continually in recent times 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 said in an April 28 note.

It said Indian mills hiked domestic spot HRC prices by Rs 7,000/tonne in April and saw a strong possibility of mills hiking domestic HRC prices by up to Rs 7,000/tonne, spread over May and June due to a very large gap between mill level domestic and market prices.

“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,” said Jayanta Roy, senior VP, Icra.

Roy said the ongoing second wave of the coronavirus makes demand outlook somewhat uncertain in the first half of FY22 while exports remain a viable alternative available to leading steel makers in India.

A prominent steel company, requesting anonymity, said even after the latest hike, domestic steel prices are trading at a discount of Rs 8,000 per tonne to the landed cost 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 said.

During the fiscal year 2020-21, export of finished steel from India, at 10.79 million tonne (MT), was higher by 29.1% as compared to export during 2019-20. Imports at 4.75 MT was lower by 29.8% over the same period.

In March alone, exports and imports increased by 125.7% and 33.3%, respectively over the corresponding month last year. Month-on-month, exports and imports increased by 97.4% and 8.9%, respectively in March, 2021. India docked 63% of exports in March to Italy, Spain, Belgium and Hong Kong.

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