Steel prices rise for the fourth month in a row

The rise in prices this month is the fourth consecutive monthly increase as domestic demand from the largest steel producers shows clear signs of recovery. However, concerns remain over the steady rise in Covid cases following the government's gradual unblocking of economic activity.

The recovery in both the automotive and domestic sectors helped steel companies to push HRC prices above pre-Covid levels of INR 42,000 per tonne.

Since July, steel companies have raised HRC prices by INR 7,000-7,500 per tonne to partially offset the rise in raw material prices and to eliminate the discount in domestic prices compared to imports.

In addition to improving demand from end users, dealers have also gained confidence in the need to replenish their stocks in the face of limited supply.

Amit Murarka, an analyst at Motilal Oswal Research, said the rise in domestic steel prices is at odds with the trend in China, where prices fell $ 25 per tonne last month and are expected to continue their decline this month.

“We believe that the rise in prices in the domestic market underscores the current strength of demand in India for flat products and the limited supply in the market,” he said.

After a recent hike, domestic HRC prices are priced at a five percent premium over the land value of imports from South Korea ($ 555 per tonne) and a roughly 10 percent premium over imports from China.

The price trend in China after the weekly national holidays will set the direction for regional and domestic steel prices. He added that if prices in China do not improve after the holidays, Indian steelmakers will find it difficult to keep costs higher than those in China as imports rise.

Iron ore prices hold

NMDC, India's largest iron ore producer, said its September sales rose 10% to 2.11 million tonnes versus 1.91 million tonnes in the same period last year.

Its production also increased by 12% to 1.83 million tons (1.64 million tons). The company managed to reduce its reserves amid strong demand from metallurgical companies.

The public sector company that raised iron ore prices last month by £ 300 a tonne for lumps (65.5% Fe) is expected to be £ 3,250 and fines (64% Fe) to £ 2,950 per ton According to sources, this month prices will continue to rise amid strong demand.