Local Indian hot rolled coil (
HRC) prices have remained at around INR 40,500/mt ($675/mt) ex-works amid low volumes as domestic steel mills have deferred price adjustments until next month, traders said on Wednesday, May 7.
According to a Mumbai-based trader, the market had been expecting a minimum downward price adjustment of INR 500/mt ($8/mt) which did not happen and buyers started to become cautious about concluding fresh bookings, preferring instead to wait and watch the pricing strategy of steel mills.
The trader said that local prices will move sideways amid low demand until at least the end of June-July period when demand and pricing might change.
Market sources said that Indian government spending had come to a complete halt against the backdrop of the Indian elections. With the elections ending on May 16 and the next government taking charge thereafter , changes in the demand-pricing equation may be expected around the end of next month at the earliest.
"Prices will not go up very high nor come down drastically. Government spending has not been as high because of the restrictions of elections and we have to wait and see," C S Verma, chairman of major domestic steelmaker Steel Authority of
India Limited (SAIL), said in a media statement.
Market sources said that most domestic mills had been able to pass on higher input costs through price increases over the last one year. However, now amid declining international prices, cheaper imports due to the appreciating rupee and low imported coking coal prices, domestic steel mills are deferring passing on lower costs of production to consumers and, the more they delay price adjustments, the more demand will become depressed, market sources added.