Indian Steel Prices May Rise Further as Coal Costs, Demand Support Market

Indian steel prices are expected to rise further in the coming weeks as higher coking coal costs push up production expenses and demand picks up after the monsoon, particularly from infrastructure and automotive sectors. 

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Hot-rolled coil (HRC) prices, which had declined slightly between June and July, have already moved higher. Prices increased by Rs 4,000 per metric ton between August and early September, taking them to a four-year high. 

The rise in steel prices has come alongside higher coking coal costs. The increase in raw material expenses has allowed steel mills to raise prices, while limited availability in the market has provided additional support. 

Several mills have been carrying out maintenance shutdowns, reducing supplies available in the market. Distributor inventories have also remained low. 

Demand is expected to improve as the monsoon season comes to an end. Infrastructure and automotive activity are likely to contribute to the recovery in consumption, providing further support to steel prices. 

Another increase of around Rs 3,500 per ton is expected in the near term, according to estimates cited in the Reuters report. 

The domestic steel market, however, continues to face pressure from imports. India was a net importer of finished steel between April and July, with imports rising 36.6% from the same period a year earlier. 

China accounted for 31% of India's finished steel imports during the period. 

India has already introduced safeguard duties on some steel imports. An anti-dumping investigation covering hot-rolled coil imports from China, Japan and Russia was also launched in June. 

Despite these measures, the rise in imports remains a concern for domestic steel producers. Higher imports could limit the extent to which mills are able to increase prices and protect their margins. 

The market is therefore facing two competing pressures. Higher coking coal costs, tighter availability and improving demand are supporting domestic steel prices, while increased imports could restrict further price gains. 

For now, the expected post-monsoon recovery in demand and elevated raw material costs point to continued upward pressure on Indian steel prices in the near term.