Domestic steel prices defied predictions and ascended through the December quarter as three tailwinds converged in the light of high global prices, tight domestic supply on account of iron ore shortage, and healthy demand growth, Crisil research report said on Monday.

Accordingly, steelmakers have raised the prices of benchmark hot-rolled coils (HRC; average monthly price) multiple times since August, rising by as much as Rs 13,800 per to Rs 51,050 per tonne in December (37 percent on-year growth). Importantly, despite this material increase, domestic prices are still 6-8 percent below global landed prices. Put another way, there is a room to raise the domestic prices further given they move in sync with the world trend. China HRC f.o.b. (free on board) prices, after plunging to USD409 per tonne in April from USD499 per tonne in January 2020, rebounded to USD647 per tonne between April and December 2020.

Global prices also touched an 8-year high in December on healthy demand and cost-push from soaring iron-ore prices. Chinese crude steel production increased eight percent in the period, while exports and inventories remained low indicating robust demand growth there.

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