Local Indian cold rolled coil (CRC) prices have remained stable during the past week at INR 41,500/mt ($620/mt) ex-works amid steady buying support and due to the possibility of tightness of supplies, traders said on Tuesday, September 13.
"The market seems to be taking a pause after a surge in the earlier weeks. But the outlook remains positive and the sentiment is bullish, prompting steady re-stocking by dealers and causing an anticipation of a tightening of supplies as several of the large mills are reporting improved export bookings," a Mumbai-based trader said.
"There is a lot of talk of steel mills going in for a second price hike during the current month. This also supports prices and dealers are motivated to build up their inventories," the trader added.
While most steel mills had announced higher flat product prices, increasing them by around INR 1,000/mt ($15/mt) on average, market sources said that mills may go in for another price hike of equal amount before the end of September.
However, two traders have cautioned against the "irrational bullishness" in domestic steel prices, pointing out the latest government data which showed that industrial production as measured by the Index of Industrial Production (IIP), has registered a negative growth rate of 2.4 percent in July, the worst of the immediate eight preceding months.
The IIP showed that 12 of the 22 industry group constituting the IIP had recorded a negative growth during July 2016.
The traders said that while local steel prices are gaining ground entirely owing to supply side factors like import protection, weak manufacturing fundamentals cannot be ignored and are also expected to get reflected in the steel markets sooner than later.
$1 = INR 66.91