India's main integrated steel mills have raised their domestic list prices for June for most steel products, even as buying interest continues to be weak.
State-controlled Sail increased its list prices by 750-1,000 rupees ($11-15) this month. Similar price hikes were also done by JSW Steel and Tata Steel, said market participants.
Mills are offering hot-rolled coil at about Rs41,500-42,500/t, while rebar is being offered at Rs40,500/t-41,500/t.
Mills cited higher cost of raw materials, such as iron ore, as the reason for the steel price increase.
Indian state-owned mining company NMDC has increased June iron ore sales prices by Rs250/t. Prices of lump with 65.5pc Fe content were raised to Rs3,100/t, while fines with 64pc Fe content was lifted to Rs2,860/t. These prices are excluding royalty, environment cess and other local taxes and duties.
Most buyers are content in taking deliveries of smaller sizes to meet immediate needs as they do not want to stock much at current prices.
Steel demand has been sluggish this month because of a cash crunch in the economy. Steel orders for infrastructure projects are picking up, although many steel suppliers have not been paid past fees, said the manager of a Delhi-based mill.
Domestic steel consumption growth eased to 7.5pc during the 2018-19 fiscal year ended 31 March, down from 7.9pc in 2017-18, because of liquidity and fuel price hikes affecting consumption by the auto sector, said India-focused ratings agency Icra. Demand growth moderated further to 6.4pc in April this year and is likely to remain lower than the 2018-19 level for the April-June quarter because of continued weakness in the auto sector and reduced construction-related activities.
Traders expressed concerns about steel demand possibly falling further during the June-September monsoon months. Monsoon rains are expected to hit India's south coast on 6 June, according to weather forecasts. Construction activity typically slows during the monsoon months.
The federal government is scheduled to present the 2019-20 budget in the first week of July, which may boost steel market sentiment if it contains investment proposals for infrastructure and proposals to shore up flagging real estate demand.
