Indian mills made harangued 2012 on an auspicious note by hiking long and flat product prices. Riding piggy bank on severely emaciated rupee v/s USD gave the leverage to the mills to bell the cat.
Reportedly the major mills have hiked prices of HRC and TMT by INR 500 per tonne to INR 1000 per tonne.
Even though the market continues in paralysis both internationally and domestically off late simmering of improvement has been noticed. It is learnt that most of domestic mills have registered good off take in December.
Low inventory with the stockiest and traders coupled with anticipation of price hike by the steel majors in January had ignited buying in December.
With no ebbing in depreciation of INR in the vicinity touching INR 53.20 = 1 USD suppliers can stay put with imports remaining at bay. Moreover with inflation in retracting mode and RBI giving indications of a possible cut in lending rate in the next review if signs are encouraging the market might just be in for an improvement.
International steel prices have also reached the bottom as the silence over the last couple of week indicates.
HRC import parity
| In USD | IN INR | |
| CFR Price | 620 | |
| Custom Duty | 35 | |
| Port Expenses | 10 | |
| Landed at Mumbai Port | 665 | |
| MODVAT | 98 | |
| Inland Transport | 10 | |
| Total landed | 773 | 41103 |
| Net of MODVAT | 675 | 35892 |
1 USD = INR 53.20
(Source: www.steelprices-india.com)
With the domestic levels prevailing at INR 36500 per tonne excluding ED and VAT, the differential is mere INR 600 per tonne with the import levels giving the domestic mills elbow room.
Holistically it would be premature to herald a reversal of fortunes for domestic mills as the trajectory of the international prices will unravel after a fortnight when the global business warms up after winter vacation. Undeniably 2011 closed with muted optimism about a revival in global levels post holiday. However this optimism was conditional on effective resolution of Euro crisis, replenishment of stocks and pick up of reconstruction in MENA nations.
Price has remained stoically silent during the last week and silence can be ominous as well.
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Products covered
1. Input materials - Iron ore, scrap, sponge iron, pig iron pencil ingot, billets and blooms
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(Sourced from www.steelprices-india.com)
