Leading domestic steelmakers have hiked the prices of Hot Rolled Coil (HRC) and Cold Rolled Coil (CRC) by up to Rs 4,000 and Rs 4,900 per tonne, respectively this week. After the price revision, a tonne of HRC will cost Rs 70,000-Rs 71,000 while the buyers will get CRC at Rs 83,000-Rs 84,000 per tonne.
HRC and CRC are flat steel used in industries such as auto, appliances and construction. Hence, any rise in steel prices impacts the prices of vehicles, consumer goods, construction costs as steel is a raw material for these sectors.
SAIL, JSW Steel, Tata Steel, JSPL and AMNS India (Arcelor Mittal) are the leading steel-making companies in the country that contribute about 55 per cent to India’s total steel production. SAIL attributed the price hike to being market driven, while JSPL assigned the price hike to spike in cost of raw materials. Indian iron ore has gone up by Rs 4,000/tonne, which is also pushing steel prices higher.
Domestic steel prices are still at 20-25 per cent discount to international prices. Most of the steel companies have ramped up exports owing to weak domestic demand. MSME sector has still not picked up. Inventory levels are low, it will aid offtake once restrictions are lifted.
Domestic wholesale steel prices have seen a hike of 4.5-6.2% from the beginning of the current month. The prices have doubled in the last one year. Buoyant international prices, which have also risen around the same pace in the last one year as in India, is driving domestic prices upwards.
The buoyancy is largely due to less availability of the material in the international market following largest steelmaking nation China’s decision to discourage exports by withdrawing 13% duty rebates on exports. China has also taken a decision to gradually reduce production from the current level on environmental concerns.
The export rebates have reduced Chinese exports in the international markets, which Indian steel players are looking to bridge. With domestic steel prices at a discount to international price, the import risk into Indian domestic market is largely contained. This has also provided optimism to the domestic steelmakers to increase prices.