Indian hot rolled coil (HRC) coil prices have faced strong buyer resistance at higher levels and so have moved sideways at around INR 36,000/mt ($660/mt) ex-works, while there has been a sharp drop in off-take volumes, traders said on Thursday, February 21.
" The $9-18/mt price hike effected by a few producers a week ago does not seem to be working. Distributors and actual users have been resisting, with volumes booked during the past seven working days showing a sharp fall," a Mumbai-based trader said.
"Local steel mills were increasing prices just based on the lower price differential between local prices and the price of imported HRC offered at $675/mt CFR Mumbai which did not make imported material attractive," the trader said.
"However, such increases cannot work without factoring in the domestic demand scenario. Domestic manufacturing growth figures over the past two to three months are dismal. This is reflected in the slowdown in purchase volumes of HRC at higher prices, indicating that the market is resisting the higher levels," the trader added.
According to market sources, despite low buying interest, steel mills have been resisting demands for discounts from traders, forcing the latter to postpone their bookings.
The market expects steel mills to either marginally roll back the price increase or offer volume-based discounts since the strategy to improve margins based purely on low import competition has been backfiring, the sources said, pointing out the large steel producers like Steel Authority of India Limited (SAIL) had refrained from increasing their HRC prices.