As expected, domestic steelmakers raised the price for hot-rolled coil (HRC) by nearly 6%, to accommodate the recent hike in iron ore prices imposed by ore miners. HRC, a benchmark product, will now be priced in India at Rs 47,500-47,650 a tonne.
However, even after the price hike, domestic steel would still be cheaper by around 4-5 per cent compared with the landed cost of imports from Korea, a country with which India has free trade agreement (FTA) pact. This leaves the domestic steel firms scope to raise prices further.
With effect from December 2, NMDC raised the price for both lump and fines ore by Rs 500 a tonne to Rs 4,500 per tonne and Rs 4,110 per tonne respectively. Domestic miners mainly take cue from the state-run miner for effecting any revision in the price of the key steel-making raw material.
Apart from the rise in iron ore prices, buoyant domestic demand, below-normal production from the secondary steelmakers who generally contribute nearly 40 per cent of the country’s total steel production and a good prospect for exports are keeping steel prices at an elevated level. The demand for steel in India rose by 7.7 per cent month-on-month in October2020.
Limited import opportunity is also keeping the prices high. Japan and Korea have now started exporting more to Europe since realisations are better in these countries compared to India. In addition, domestic demand in these two countries is also buoyant now.
The rising trend in the domestic price of steel is expected to continue till China devours all its steel in the domestic market leaving other countries which used to depend on China for steel to look out for alternate sources including India, the supply of iron ore becomes regular in the domestic market and secondary steel producers resume normal production.