Indian HRC prices stable amid expected price hikes and import uncertainty

Hot rolled coil (HRC) prices in the Indian domestic market have remained stable during the past week at INR 36,000-36,250 ($679-683/mt) ex-works, against a background of low buying activity and the anticipation of price hikes by steel mills, traders said on Monday, February 4.
 
"With the market anticipating another round of HRC price increases of $9-10/mt, steel distributors are not willing to increase inventory levels, as they are not sure whether current demand will enable the market to absorb higher prices," a Mumbai-based trader said.
 
"Import offers from China or South Korea have been negligible over the past few weeks. Hence, local steel mills are in an advantageous position to push through another hike in domestic HRC prices," the trader said.
 
Market sources have said that the domestic HRC market is currently facing a lot of uncertainty and another price hike by steel mills may backfire in absence of any demand uptick. Besides, the appreciation of the rupee against the US dollar could trigger a fresh flow of imports from China and South Korea.
 
The rupee during Monday mid-session trading gained its highest level since last October, pushing the dollar below the INR 59 mark to INR 52.96 to a dollar. The rupee had closed at INR 59.19 to a dollar on the evening of Friday, February 1.
 
"The market is poised for some amount of volatility. Steel mills are expected to test demand by increasing their HRC prices by $10-15/mt. But if the rupee continues to gain on the back of revived investor sentiments from recent interest rates cuts, making imported HRC cheaper, domestic mills may be forced to make price corrections," a Kolkata-based trader said.
 
"With the short-term price outlook remaining uncertain, the end result would be the market refraining from booking substantial volumes," he added.