Steel companies have increased prices by Rs 1,200 a tonne effective November 1, bringing it closer to peak levels of 2018.

In November 2018, prices of hot rolled coil (HRC) — a benchmark for flat steel — were at Rs 46,250 a tonne.

However, prices were reduced the following month. Prices of HRC were close to Rs 45,000 a tonne after the current increase. According to a producer, while HRC prices were increased by Rs 1,200 a tonne, the rise in prices of galvanized and colour coated products were higher, but widely varying.

V R Sharma, managing director, JSPL, said the company had increased prices by Rs 1,000-1,200 a tonne. On a cumulative basis, steel mills have increased HRC steel prices by Rs 8,000-8,500 since July. The increase in prices reflected a recovery in domestic demand.

Jayanta Roy, senior vice-president, ICRA, said domestic steel (HRC) prices had been through a roller coaster ride in the past two years.

“While steel prices ruled at Rs 46,500 per tonne in the beginning of November 2018, the rates dropped sharply to the recent low of Rs 32,250 per tonne in the next one year until November 2019. Prices, however, took a u-turn thereafter, reaching the current level of close to Rs 44,500 per tonne. At current levels, domestic prices are aligned with international steel prices,” he added.

A producer said, “I have not seen these kind of margins in a long time. They are not at peak levels but at least somewhat close to it.” Though iron ore prices are at elevated levels, coking coal prices have partially offset it.

The price rise in steel is largely seen as a reflection of the uptick in domestic demand, especially from segments like automotive, appliances, apart from rural. Sharma said the government projects had also picked up. Consumption of finished steel in September 2020 registered an increase of 3.74 per cent month-on-month basis but was lower by 0.8 per cent over 2019.

With domestic steel demand picking up, companies are cutting down on exports. In the initial months of the lockdown, steel firms diverted bulk of their output to export markets. For some companies, exports accounted for 70-80 per cent of total output.

However, month-on-month exports have been coming down. In July, exports of finished steel products stood at 1.376 million tonne which dropped to a little more than a million tonne in August and in September it was around 864,000 tonne that was lower by 15.2 per cent compared to September 2019. In contrast, exports in July saw a rise of 128 per cent compared to the same period last year.

Sharma said JSPL’s exports were now at 15-17 per cent of the total produce. He said the firm had decided not to export semi-finished steel and would be exporting finished steel as realisations were higher.