Major Indian Mills Changed Finished Steel Prices

Rising input costs, low inventories, and increasing prices in the international market are the key factors behind the change in steel prices. That’s why major steel mills in India have raised their prices for orders beginning in March 2023.

As predicted by market experts, a few major mills have hiked prices by around Rs 1,000-2,000/ton for long and flat steel products. Here are the reasons behind the price hike:

Rise In Input Costs

On the cost front, NMDC hiked the price of iron ore by around Rs 1,000/ton between December 2022 and January 2023. Meanwhile, Odisha miners also raised prices by around Rs 800-1,000/ton in the same time frame.

Coking coal prices increased to around $350/ton as against the beginning of January 2023 at around $300-310/ton, CFR India, a hike of about $50/ton in the last two months. Coking coal prices jumped amid concerns of the global economy slipping into a recession in the wake of a surge in energy costs sparked by Russia’s invasion of Ukraine.

Boosted Demand

Steel demand in the domestic market remains active from both the infrastructure and real estate sectors. Also, with the recent announcement of the Union Budget, which boosts investment in the construction sector, participants are keeping their purchases active, and on the supplier side, they are keeping prices higher.

Global Steel Prices Rally

Globally, steel prices have been rallying after China announced plans for a package for its ailing real estate sector and attempts to boost its domestic demand. India’s HRC export price stood at around $705-710/ton FOB, the highest in the Southeast Asian region due to a recent price increase of around $20/ton by Far-East and Chinese suppliers.

In January 2023, export volume rose 33-34% against December 2022 to 0.75 million tons.

Less Import Parity

Regarding import parity, domestic prices are currently equivalent to or cheaper than the landed cost of imports from Far-East countries and China. Therefore, there is no immediate pressure to import. 

Insight

The world’s largest steel producer, China, reported a declining inventory of finished steel products, largely for flat steel products. Also, market experts expect steel prices to remain supported owing to the cost-push and recovery in China demand along with the recent announcement of production curbs on rising pollution in the country. Thus, this ultimately imbalances supply demand from the world’s largest producer and is likely to support the steel market globally.

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