HRC strength supports Indian prices, encourages exports
Posted on 08 April 2021
Higher flat steel prices in the international market are keeping steel prices in India elevated, says India Ratings and Research (Ind-Ra). This is also encouraging mills to focus on exports despite strong local demand.
Domestic hot rolled coil prices on a Mumbai 2.5mm-8mm, IS2062 basis increased by 1% on-month in mid-March to INR 54,250/tonne ($729) and were 42% higher on-year.
Indian rebar prices are also strong, supported by robust domestic demand, while rebar prices in China have risen due to short domestic supply, Ind-Ra observes in a note sent to Kallanish.
Both HRC and rebar domestic spreads improved in mid-March due to the slight increase in steel prices and lower coking coal prices. Domestic HRC spreads increased to INR 38,600/t, up INR 1,400/t on-month. Domestic rebar spreads increased to INR 33,250/t, around INR 1,600/t higher on-month. Spreads are likely to remain elevated over the coming months due to low coking coal prices.
Indian end-use demand should remain strong in the fiscal year through March 2022. Domestic finished steel consumption in April 2020-February 2021 fell only 8.8% on-year to 79.2 million tonnes despite the Covid-19 pandemic impact, reflecting improving end-use demand, Ind-Ra says.
Indian iron ore production is likely to improve further in the June quarter following slow mine restarts. January production was nevertheless at 21.88mt, down 2% on-month and 7% on-year. India’s exports of iron ore fines/lumps remained high at 3.97mt in February due to high export realisations. “This is further contributing to the domestic short supply of iron ore. Prices are however not likely to increase much further, as the iron ore supply gradually improves in 1QFY22,” Ind-Ra concludes.Source : Kallanish