Is Further Hike Likely In Indian Stainless Steel Prices?
1 month ago
Stainless Steel
Stainless Steel

Is Further Hike Likely In Indian Stainless Steel Prices?

The Indian Stainless Steel market has seen a notable price surge due to rising raw material costs, import challenges, and festive demand. Global trends, supply chain issues, and regulatory factors further contribute to potential future price hikes. Amidst uncertainties, stakeholders must navigate this complex landscape.

The Indian Stainless-Steel market has witnessed a substantial price surge of up to Rs 20,000/ton ($240) in August 2023. This remarkable increase can be attributed to several factors, including raw material cost increase, import challenges, and a boost in domestic demand due to the upcoming festive season.

With the recent surge leaving market participants eager to understand the market’s future trajectory, signs point toward the possibility of further price hikes. Let’s delve into the factors contributing to this potential price escalation and explore the various raw material dynamics at play.

Global Trends Impacting Indian Market

The global Stainless-Steel market’s bullish trends, particularly in countries like China, Taiwan, and Korea, are playing a pivotal role in influencing the Indian market. The difficulty in importing materials, especially from Chinese and Taiwanese companies is a significant aspect contributing to this bullish trend. As these imports become more challenging, major stockists are actively building up their material reserves, anticipating not only a demand surge but also a seasonal improvement in the Stainless-Steel products requirement in India.

BIS Certificates & Regulatory Factors

The renewal of Bureau of Indian Standards (BIS) certificates, a crucial certification for quality and standards of products in India is on hold by Indian authorities. This has created a situation where only a limited number of global Stainless-Steel suppliers have managed to renew their certificates. Many suppliers, especially for SS 304 and 316L series products, are still awaiting a response from Indian authorities.

The impending implementation of the BIS certificate requirement for importing 200 series Stainless Steel material, applicable from 1 September 2023, is posing further challenges for market participants.

Raw Material Price Dynamics

Indian Stainless Steel market’s price surge are intricately linked to raw material cost dynamics. Here are some key raw materials and their recent price scenario:

  • Nickel Pig Iron (NPI): Nickel Pig Iron rates have surged by 8% recently due to the Indonesian government’s proposal of a country-wide quota system. Indonesia, the largest global Nickel producer, has been impacted by corruption charges, environmental concerns, and accidents that have constrained production. This scarcity has led to importation from other sources, adding to the price increase. As Nickel is a crucial component in Stainless Steel production, this rise in Nickel Pig Iron prices is exerting pressure on 300 and partly 200 series Stainless Steel grades.
  • Stainless Steel Scrap: Worldwide, 304 Stainless Steel scrap price has risen by around 5% in the past month. This increase is likely to continue in September 2023 due to the mounting pressure to adhere to the norms of the European Carbon Border Adjusting Mechanism (CBAM), which promotes cleaner Stainless-Steel production.
  • Ferro-Chrome Ore: Chromium prices have been on an upward trajectory, driven by increasing chromium ore and molybdenum concentrate prices. High-carbon ferrochrome price surge can be attributed to these escalating raw material costs.
  • Ferro-Molybdenum Ore: Molybdenum prices have witnessed a recent uptick, leading to an 11% increase in China’s ferromolybdenum price in the past month. This rise is driven by the elevated prices of molybdenum concentrate.

Market Outlook

Considering the factors mentioned above, it appears that major Indian Stainless-Steel producers may announce another significant hike in the coming days. This potential price increase will be influenced by import challenges, improved demand, and rising raw material costs.

OFB’s Insight

The Indian Stainless Steel market faces escalating raw material costs, supply chain issues, and regulatory complexities. With recent price surges sparking interest, potential further increases are suggested due to global trends and supply chain intricacies.

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