The Indian hot rolled coil (HRC) market has remained sluggish in the past week with prices moving sideways at INR 36,250/mt ($650/mt) amid weak demand, a Mumbai-based trader has told SteelOrbis. Discounts of around two percent have been maintained as in the previous week.
However, the domestic price of HRC on US dollar basis has firmed up by around $5/mt following the weakening of the rupee against the US dollar over the past week, the trader said.
Domestic demand has remained quiet against a background of reports of further slowdown of growth in core industrial sectors, while no significant developments were reported from the import markets either even though there were a few HRC offers for S. Korean and Japanese origin HRC at $620/mt in the southern Indian market, according to a Delhi-based trader.
According to data released by the Indian government on August 1, the aggregate growth in domestic natural gas, fertilizer and steel output during April-June 2012 was 3.6 percent compared to 5.2 percent during the corresponding period of the previous year.
There was anticipation last month that domestic integrated steel producers might announce a price cut in HRC, but to date there have not been any such moves and stockyard prices have been maintained with the market in wait-and-see mode, the trader said.
"So far domestic mills have been banking on the weak rupee to insulate local markets from imports. The fears now are that with any import offer below $600/mt all bets would be off since the advantage of the weak currency would be negated," he said.
International HRC price trends are critical since any movement towards the $600/mt mark would further fuel the opposition of domestic mills to India's Comprehensive Economic Partnership Agreement (CEPA) with Japan and S. Korea, said an official with an eastern Indian producer.
While the Indian government increased the import duty on alloy steel products to seven percent from five percent early this year, imports from S. Korea and Japan attracted concessional rates of 3.125 percent and 3.3 percent respectively under the CEPA.