Improved domestic demand, driven by the construction sector and infra projects, and a rise in raw material prices, primarily coal, saw India’s steel majors increase prices by 2–8 per cent across categories like hot-rolled coils and rebars (used mostly in construction sector), and even cold rolled coils. This is the first major price hike that mills have initiated since the beginning of this fiscal in April.
Trade sources say price of benchmark HRC (ex-Mumbai) was increased to ₹56,700 per tonne, up 2 per cent over August, for early September deliveries. Similarly, re-bar prices jumped by ₹3,700 per tonne (8 per cent) to ₹54,100/tonne. On the other hand, cold rolled coils saw a somewhat muted increase of 1.5 per cent of ₹800 per tonne, to ₹61,100 per tonne.
According to Motilal Oswal Financial Services, steel demand in India is expected to pick up September onwards, “as construction activities pick up pace post the monsoon season with new projects coming on stream”.
“The spreads between Long (like rebars) and Flat steel have fallen to ₹2,600 per tonne from a high of ₹5,500 per tonne in August. China’s stimulus measures are also expected to boost prices for ferrous metals in the international market and we expect the steel prices in the export market to improve in the coming weeks,” the report mentioned.
As the demand for long steel picks up amid higher demand from the project segment, the trade level prices for primary long steel improved by ₹2,000-3,000 per tonne week-on-week, and secondary steel prices improved by ₹1,500 per tonne w-o-w, the report added.
“Restocking is happening at the trade level which indicates higher consumption or anticipation of demand improvement,” a trade source said.
Coal rates up
Part of the increase has also been initiated following a rise in coal prices. From ₹242 per tonne price point during August 1, coal prices have now increased to ₹270 per tonne levels as on September 5.
As per data from the Steel Ministry, total finished steel production by the private sector was at 46.33 million tonnes (mt), up by 12 per cent; and accounted for 85 per cent of the total production during the April–August period; the rest being share of PSUs. The steel production from PSUs was 8.15 mt for the period under review, up 12 per cent.
For August, the variation in stock was a negative 2,36,000 tonnes (0.24 mt), as against a positive 3,64,000 tonnes (0.36 mt) for July. Negative variation indicates higher consumption of steel stocks at a trade level.
The variation in stock is arrived by deducting closing stock at mill-levels from the opening stock.