Local Indian hot rolled coil (HRC) trade prices have continued to suffer setbacks from the combination of the demand depression among end-users, the rise in availability of cheaper imports, and dealers refraining from committing fresh bookings amid the trade slowdown, SteelOrbis learned from trade and industry circles on Monday, May 22.
Local Indian HRC trade prices have lost INR 1,000/mt ($12/mt) to INR 57,000/mt ($690/mt) ex-Mumbai and are down INR 500/t ($6/mt) to INR 55,500/mt ($672/mt) ex-Chennai in the south.
Sources said that the inflow of cheaper imports has created a lot of nervousness in the market with reports of a further lowering of ex-China offers.
Trade circles have maintained that ex-China bookings for July shipments are being reported in the range of $590-600/mt (INR 48,734-49,560) on landed-price basis, even lower than the $610/mt (INR 50,400/mt) landed price for end-of-June booking just a week ago.
“Alarm bells are ringing for local producers hit by the surge in imports. Sellers from China are extremely aggressive in the local market. Even small and medium-scale end-users are also increasing import sourcing for small volumes too,” a Mumbai-based distributor said.
“Trade channels too are not willing to commit fresh bookings with lean monsoon months ahead. Also, given the prolonged bearish market conditions, mills will definitely have to look at a base price cut for the second consecutive month in June. So why rush to restock now,” he said.
At least two officials at private mills acknowledged that, even though it is early, internal assessment is for a base price reduction in the range of INR 1,000-1,500/mt ($12-18/mt) next month to support the market.
However, according to a steel sector analyst at a Mumbai-based financial advisory firm, a base price reduction is unlikely to offer a positive impact as the current market is afflicted by a combination of a deep industrial demand depression and oversupply, as local mills are diverting export allocations for domestic sales as overseas sales face strong headwinds.
$1 = INR 82.60