Surge in Chinese Steel Prices Offers Respite to Indian Steel Industry

The recent rise in Chinese hot-rolled coil (HRC) steel prices provides Indian steelmakers a competitive edge by reversing the import parity premium into a discount. This shift potentially stabilizes domestic prices amid ongoing market challenges, despite rising raw material costs potentially curbing profit margins.

Recent increases in Chinese steel prices have offered a potential reprieve to Indian steelmakers, who have been grappling with price pressure. According to a report from Axis Securities, Chinese hot-rolled coil (HRC) prices rose in September 2024, altering the competitive landscape by turning the import parity premium of domestic HRC prices into a discount.

In detail, the domestic HRC prices were previously about 7-8% higher than their Chinese counterparts as of September 2024. This premium has been reversed, now reflecting a 3% discount. HRC refers to steel rolled into coils at high temperatures, widely used in the construction, automotive, and manufacturing sectors.

The report suggests this shift could help stabilize domestic prices, enabling Indian steelmakers to compete more effectively with imports. Meanwhile, Indian authorities have launched an anti-dumping investigation against imports of Cold Rolled Non-Oriented Electrical Steel from China, as domestic complainants allege these are priced unfairly, harming the Indian industry.

Despite these developments, the overall impact of China's economic stimulus on steel price margins may remain limited. Although higher HRC prices are positive, increasing costs of raw materials like iron ore and coal could counterbalance profit gains, maintaining a check on profit margins.

(With inputs from agencies.)