Local Indian hot rolled coil (HRC) prices have remained stable during the past week at around INR 41,000/mt ($681/mt) ex-works amid low volumes as the market awaits direction from domestic steel producers, traders said on Tuesday, July 22.
"Buyers are in wait-and-see mode with steel mills yet to announce their price revisions. Distributors are not willing to conclude purchases as they are unsure on the size of the price hike on the cards," a Mumbai-based trader said.
"The government has announced several measures which would increase the cost of production. But with improved demand still not materializing, steel mills will have to be cautious on how much of the higher cost can be passed on to the market," he said.
"The monsoon rains gathered momentum across the country last week. Demand for long products is already showing some slackening as construction activity will ease owing to rains. This will also have a negative impact on flat product market sentiments," he added.
Sources said that local steel mills, which are expected to announce price adjustments in July, have deferred their price decisions and are taking more time to assess the impact of government decisions.
The Indian government has announced that it is planning to increase royalty rates on iron ore production from 10 percent to 15 percent, with miners immediately stating that they would pass on the increased cost to steel companies. At the same time, the import duty on coking coal has been increased from zero to 2.5 percent, and this is expected to push up the cost of production by around INR 200/mt ($3/mt).
Sources said that no significant HRC import transactions have been reported in the market during the past week.
With the Indian rupee showing continued weakness at above the level of INR 60 to a dollar and amid tepid demand conditions, local Indian traders have turned down HRC import offers at $515/mt FOB ex-China, the sources added.