Local Indian hot rolled coil (HRC) prices during the past week have remained at around INR 40,500/mt ($690/mt) ex-works as buyers and steel mills have moved into pause mode awaiting signals from the new Indian government which will take charge later this month, traders said on Tuesday, May 20.
On the demand side, steel mills have been waiting for signals from the new government which could boost consumption across sectors, while, on the supply side, buyers have been weighing the price competitiveness of domestic HRC versus imported HRC, the traders said.
There are too many variables in the market and hence buyers have remained cautious resulting in low transaction volumes, a Mumbai-based trader said.
Local mills have been expected to announce a downward price adjustment next month in view of the fall in input costs and rising import competition, but any boost on the demand side from the new government could prompt mills to maintain prices at current levels, the trader said.
Market sources said that imported HRC ex-China had become very viable in view of the fast appreciating Indian rupee against the dollar and local mills would have to face this rising competition.
The Indian rupee touched an 11-month high at INR 58.57 against the dollar during the week, riding on strong foreign currency inflow as foreign investors were buoyed by Indian voters giving a clear majority to the Hindu nationalist Bharatiya Janata Party (BJP) and for the first time since 1984 a single party was given a clear mandate in the month-long elections which concluded on May 16.
Sources said that Chinese HRC import offers have been standing at around $530/mt CFR Mumbai, which translates to around INR 31,000/mt excluding import duty and VAT, while any further appreciation of the rupee will increase inward shipments.
$1 = INR 58.69