The downtrend in the local Indian hot rolled coil (HRC) market has gained further momentum with prices slumping amid a combination of buyers retreating ahead of the Diwali festival holidays and trade channels quoting lower offers to liquidate stocks and improve cash flows.
Sources said that HRC trade prices have lost INR 1,000/mt ($12/mt) to INR 56,500/mt ($678/mt) ex-Mumbai and are down INR 750/mt ($9/mt) to INR 57,550/mt ($691/mt) ex-Chennai in the south.
However, despite the declines in prices and the sharp slowdown in movement of stocks at both trade and mill levels, sources in trading circles have maintained that mills will still go ahead with decisions to hike base prices by around INR 1,500/mt ($18/mt), citing a surge in input costs, particularly as regards imported coking coal. But the announcements of such base price revisions could be expected to be deferred after the Diwali holidays next week and let trade-level prices settle at a new bottom.
“Prices have lost ground over past consecutive weeks. But I don’t think it is a matter of serious concern because the weakness in the market is induced by the series of holidays, steadily falling business activity overall, and the need of market intermediaries to keep cash on the books,” a Mumbai-based distributor told SteelOrbis.
“The current trend can be expected to run through next week. Thereafter, we expect a reversal of trend because there has not been much negative change in demand dynamics,” he added.
An official at a private mill pointed out that steel consumption was up 15 percent to 64 million mt in the first half (April-September) of the fiscal year 2023-2024 and this is expected to be sustained through the rest of the year.
He said that this would continue to support not only the market but also encourage mills to pass on higher input costs to consumers.
$1 = INR 83.30