Local Indian hot rolled coil (HRC) prices have trended sideways during the past week at around INR 40,500/mt ($671/mt) ex-works amid scarce volumes, with buyers waiting for a further lowering of prices by steel mills, traders said on Wednesday, April 16.
According to two Mumbai-based traders, prices are expected to be under pressure from the fall in international prices of iron ore and coking coal and due to low protection from imports with the Indian currency appreciating against the dollar.
Traders said that most buyers have not been concluding transactions for large volumes in expectation of another round of downward price adjustments by local steel mills in May.
"Global prices are down by 5-7 percent and there is overproduction in China and the rupee has been moving up against the dollar. These factors will put pressure on the prices of local steel mills in the short term," the traders said.
"Demand has also not been showing any signs of an uptick and around 5 million mt of new capacity is finding its way into the market. Naturally, traders and buyers are postponing large transactions in the market," the traders added.
Sources said that the market expects mills to lower their HRC prices again by around INR 500/mt ($8/mt) but are not sure when this will happen.
The downward adjustment earlier this month has failed to boost volumes in the market and, if the steel mills see inventories mounting, a price revision could be on the cards in early May.
However, another section of the market considers that the steel mills will await the results of the national elections on May 17 before making any changes to their HRC prices.