The hike is supported by strong domestic demand in India and restocking by traders in advance of the publication of the Indian budget, with predictions of more price increases in February.
As Europe is currently the highest-paying market, the majority of Indian mills want to export HRC into Europe for March shipment and book good income for this fiscal year, ending 31 March 2023 (FY23). However, some sources believe that prices will stabilize soon because this increase is “sentiment-driven, not demand-driven.”
At a cost of $780 per tonne cfr, a tier-1 Indian mill last week supplied 10,000 tonnes and 3,000 tonnes of structural grade HRC to northern Europe and southern Europe, respectively. Another customer reports receiving quotes for the same quality at $785/t cfr Spain, which nets to $720โ725/t fob India.
According to a source, “European enthusiasm is projected to persist only for another 7 to 10 days, given the purchasers’ reluctance to the price increase and China’s [post-holiday] restart.” “This would also regulate India’s price-hike rampage, which could lead to two outcomes. India would either stop exporting altogether and concentrate on the domestic market through [the end of] FY23, which is doubtful given the robust domestic market.”
Last week, Indian mills increased their domestic HRC offers for E-250 grade HRC by INR 750/t ($9.17) to INR 57,750/t ex-Mumbai. Currently, quotes for E350 HRC, cold rolled coil, and galvanized coil are INR 60,750/t ex-Mumbai, INR 64,500/t ex-Mumbai, and INR 67,500/t ex-Mumbai, respectively.
Market members anticipate an additional price increase of INR 2,000โ2,500 per t in the domestic market. Additionally, this increase will raise export prices from the current $780-785/t cfr Europe to $750-755/t fob India, or $800-810/t cfr Europe.
Since many Indian mills are optimistic about the impending budget, if the government raises the import tax on flat steel, mills will be even more motivated to improve their bids. In case Covid infections persist longer than predicted, buyers are keeping an eye on Chinese offers in the hopes that China would change its mind. As a result, there would be an excess of HRC on the market, which would drive down prices.
