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Steel companies have hiked hot-rolled coil prices by ₹2,000 a tonne to about ₹42,500 and that of wire rods and TMT bars by a similar amount to ₹42,750 and ₹39,000, respectively.
The price hike this month is the fourth consecutive rise as the domestic demand showed strong signs of revival. However, the concern still lingers on a steady increase in Covid cases after gradual unlocking of economic activity by the government.
The recovery in both automobile and white goods sectors have helped steel companies push HRC prices above the pre-Covid level of ₹ 42,000 a tonne.
Since July, steel companies have increased HRC prices by ₹7,000-7,500 a tonne to cover the rise in raw material prices partially and bridge the discount in domestic prices compared to the landed cost of imports.
Besides improvement in demand from end users, dealers have also gained the confidence to replenish their inventory amid tight supply condition.
Amit Murarka, Research Analyst, Motilal Oswal Research said the rise in domestic steel prices is in contrary to the trend in China where prices have fallen by $25 a tonne last month and are expected to decline further this month.
“We believe the domestic hike underscores the current strength of demand in India for flat products and tight market supply,” he said.
Post the recent hike, domestic HRC are priced at five per cent premium compared to the landed cost of imports from South Korea ($555 a tonne) and about 10 per cent premium to imports from China.
The price trend in China, post their week-long national holidays, would determine the direction for regional and domestic steel prices. If prices in China do not improve post the holidays, it will be difficult for Indian steel producers to hold costs at a premium over China as imports will start seeping in, he added.
Iron ore prices to hold firm
NMDC, the largest iron ore producer in India, reported that its sales were up 10 per cent in September at 2.11 million tonne against 1.91 mt logged in the same period last year.
Its production also increased by 12 per cent to 1.83 mt (1.64 mt). The company has managed to reduce its inventory on the back of strong demand from steel companies.
The public sector company, which hiked iron ore prices last month by ₹300 a tonne each for lumps (65.5 per cent Fe content) to ₹3,250 and for fines (with 64 per cent Fe) to ₹2,950 a tonne, is expected to increase prices further this month on the back of buoyant demand, sources said.
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