Indian steel buyers lobby Delhi over rising prices

A recent rise in steel prices in India has prompted some consumer groups to call for government intervention to check the increases.

"Domestic steel buyers are facing a supply shortage since June, as integrated mills only sell material to big traders who are hoarding steel with the intention of raising prices," said Badish Jindal, president of the Federation of Punjab Small Industries (Fopsia).

Fopsia represents about 1,000 small and medium-size enterprises that consume an average of about 50,000 t/month of steel, mainly hot-rolled coil (HRC), cold-rolled coil (CRC), wire rod and structural steel such as rounds.

Indian domestic HRC prices were at 39,000 rupees/t ($530/t) on 28 August, up by Rs5,000/t from a low for this year reached on 17 July.

Mills have indicated a further price hike of Rs2,000/t in September, citing rising global steel prices and raw material costs. The Argus-assessed cfr Vietnam HRC price was at $528/t on 2 September, up from $455/t on 17 July.

Fopsia members have been unable to pass on the steel price increase to their downstream customers, which are citing weak sales because of the impact of Covid-19 on India's economy.

Jindal said electric-arc furnace-based steelmakers, which use ferrous scrap as a raw material input, have raised steel prices in line with higher scrap prices, which have increased by Rs4,000/t from April to Rs28,000/t.

The recent rise in Indian steel prices has been driven by a gradual lifting of lockdown measures since June, which have released pent-up demand. Strong steel exports from India this year have also enabled inventories to be kept low, supporting a quick turnaround in domestic prices once the economy started opening up.

India's largest iron ore producer NMDC raised its August domestic prices by Rs500/t from July to Rs2,950/t for 65.5pc Fe lumps, and by Rs2,600/t for 64pc Fe fines.

"How can raw material costs increase for integrated mills if they all have captive mines?" Jindal said.

The Argus 62pc Fe cfr China index is at around a six-year high. Domestic Indian iron ore prices are not solely determined by movements in the international market, given blast furnace-based integrated mills produce steel using their captive iron ore mines. These mills also compete with overseas steelmakers in export markets, especially when domestic Indian demand is subdued.

Immediate government intervention against rising steel prices in India is also being sought by the Engineering Exports Promotion Council (EEPC), a body comprising producers of engineering exports.

India's restrictions on steel imports from China, Vietnam and South Korea have led to Indian steelmakers raising prices across product categories, EEPC said. "This has sent raw material costs for "user industries sky high, making engineering exporters uncompetitive in the international market," it said.

India has imposed anti-dumping duties on all flat steel products including HRC, CRC and coated steel from China, Vietnam, South Korea and Japan.

EEPC is appealing to the government to ensure availability of steel at export parity prices for small and medium engineering exporters, "as this is a question of their survival in these difficult times."

By Charlotte Rao