The short-lived stability of the local Indian hot rolled coil (
HRC) market has come to an end during the past week, with prices moving down by INR 500/mt week on week to INR 39,000/mt ($606/mt) ex-works, amid a combination of sluggish demand, uncertainty over steel mills' pricing and the impact of the reformed indirect tax regime which takes effect next month, traders said on Monday, June 5.
"After remaining stable for just a week, local
HRC prices are back on a downward trend. Apart from sluggish demand, many uncertainties have emerged in the market," a Mumbai-based trader said.
According to the trader, Indian steel mills are expected to keep their base prices unchanged for current month deliveries, ignoring weak market conditions, and end-users are in no position to absorb higher input costs, thereby accentuating the falling demand trend.
A number of market sources have said that every market intermediary is concerned and worried over the reformed indirect tax regime - the Goods and Service Tax - due to come into force on July 1
The sources said most market players, particularly those who trade on a small or medium scale, are not prepared for the new tax regime in terms of filings of returns, fears of working capital getting blocked, and unfamiliarity with the digital backbone of the tax filing and payment platform.
Accordingly, most dealers are limiting their transactions so as not be carrying excessively large stocks during the tax transition period, the sources added.
$1 = INR 64.32