Soon after raising hot-rolled coil (HRC) prices by Rs 3,000 a tonne on 2 December, India’s domestic steelmakers have raised their benchmark product’s price by another Rs 2,200 per tonne. This price hike is effective from 9 December.
A second hike during the month, on the back of buoyant domestic demand, was largely anticipated since the domestic HRC prices, even after the first hike in December, were at a 6% discount to import parity prices from China. Analysts said there could be the third hike after an inevitable revision in the prices of iron ore in the next few days.
India’s steel industry relied heavily on exports during the initial months of lockdown as domestic industries were mostly shut. The recovery since then has been sharp. The steel industry feels activities are now full restored, and the industry has seen a V-shaped recovery. The demand surge, however, has led to a surge in prices that have now gone past peak levels of 2018.
Domestic prices are also impacted by international prices besides the forces of demand and supply. There is an increase in demand in the international market. Iron ore prices are at around $150 a tonne, which has an impact on global prices. Indian prices cannot remain insulated for long. The increased domestic demand has also reduced exports substantially.
Earlier in the week, minister for MSMEs and road transport Nitin Gadkari came down heavily on the steel and cement industries for jacking up prices, without valid reasons.
After the second hike in December, the wholesale price of HRC (ex-Mumbai) currently stands at Rs 51,000 per tonne, the highest since 2008. The current price is around 40% higher than that of July 2020.
The steel prices in the domestic market have been moving northwards on the back of rising domestic demand and iron ore prices, higher international prices and subdued production and limited imports, analysts said.
Japan and Korea, major two exporting countries to India apart from China, have now started exporting more to Europe since realisations are better in these countries compared to India. Besides, domestic demand in these two countries is also buoyant now.