Providence seems to favor Indian mills at the onset of Q4. Market is piquantly abuzz with expectation of price hike in long and flat by at least INR 500-1000 per tonne.
If the import parameters seem to be favoring the flat producers with INR remaining fickle and the international availability getting constricted during winter it is the improved retail demand and aggressive pricing by some long producers which has kept momentum alive in long products.
Long product demand typically picks up in Q3 after festivities which have come to passé in selected retail pockets of housing and projects for TMT. Bloated cost parameters for the secondary sector with increased power tariff , limited scrap availability and increased iron ore levels has taken the leeway of secondary sector the primary sector has capitalized on this with aggressive pricing .The gap between the secondary and primary levels have squeezed to INR 3500-4000 per tonne from the norm of INR 4500 -5000 per tonne.
As the financial year culminates the demand is likely to move up with projects slated for completion. This has certainly prodded mills to contemplate hike in price by at least INR 1000-1500 per tonne for long
Flat cry in wilderness might be in for a change with INR remaining emaciated v/s USD. At the same time logistical bottlenecks in Black Sea and resurgence in domestic levels in China has led to decline in export availability. International iron ore price and its domestic fallout will certainly compel some domestic mills have been depending on imports off late pass over the cost burden to buyers.
Current import offers of HRC at USD 580-585 per tonne ,CNF parity is tilted homeward
| | In USD | IN INR |
| CFR Price | 580 | |
| Custom Duty | 33 | |
| Port Expenses | 20 | |
| Landed at Mumbai Port | 633 | |
| MODVAT | 105 | |
| Total landed | 738 | 40578 |
| Net of MODVAT | 633 | 34805 |
| USD :INR | 55.000 |
In per tonne
Domestic retail level at INR 36000 per tonne (excl taxes) at Mumbai meager gap of INR 1200 per tonne certainly give elbow room to Indian mills to hike price by at least another INR 500 - 1000 per tonne since import hassles and long lead time takes away the extra advantage of import material.