The Hindu Business Line : Rise in HR steel prices seen on reduced output

IN line with the global trend, hot rolled (HR) steel prices may go up marginally from September this year, officials in the Steel Authority of India Ltd (SAIL) said.

"If the present situation continues, the price hike could be in the range of Rs 700-800 per tonne and if international prices move up by a few dollars more, the effective increase in domestic prices could be up to Rs 1,000 a tonne from September," officials said.

This would mean that the average domestic price of HR steel, which is currently around Rs 25,000 per tonne including excise duty, may touch Rs 26,000, the officials said.

Steel prices have witnessed an increase in the range of $10-$30 across the world market in recent weeks.

The festive season would also lead to higher consumption levels and this could also help move up prices, officials said.

In the US market, according to the latest report of the World Steel Dynamics (WSD), spot prices of HR steel have gone up by $10-20 per tonne.

Also, the delivery price to steel service centres, which bottomed out at $420-440 per tonne f.o.b (free on board), is now around $440-$460 per tonne. Simultaneously, US steel production is also down and imports are also reported to be lower. This is coupled with the fact that users appear to have liquidated their inventories and this would lead to releasing pressure on the prices, SAIL officials said.

Scrap steel prices used for manufacturing steel have also increased sharply during July. Heavy melting scrap prices have moved up from $125 per tonne to around $180-$185 per tonne while automotive scrap prices have moved up from $165 per tonne in May to $215 per tonne at present, the WSD said.

Nucor, the largest steel maker in the US, has announced on Tuesday a $60-hike per tonne for September delivery terming it as scrap surcharge, officials pointed out.

In China, spot prices for HR coils have rallied in the past few weeks and are currently ruling at around $480 per tonne as compared to $444 average price in June this year.

The WSD further states that Chinese finished steel exports are expected to decline to 1.2-1.5 million tonnes per month from 2.2 million tonnes exported in June this year.

The trend is quite similar in Western Europe where several companies had cut production earlier to arrest the price fall. With imports down and production cut, discounted prices seem to have risen from euro 320-330 per tonne f.o.b during early July to around euro 360 per tonne f.o.b in the beginning of August, the WSD noted.

Indian users import substantial volumes from the mills in Russia and Ukraine.

According to WSD, majority of the Russian and Ukrainian mills are claiming to be fully sold out up to September and asking for an increase of up to $30 per tonne.

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