The local Indian hot rolled coil (HRC) market has declined for the second consecutive week, with prices moving down INR 500/mt ($8/mt) in the past week to INR 38,500/mt ($595/mt) ex-works, as pessimism has mounted in relation to manufacturing sector growth and also in terms of exports of finished steel from the country, traders said on Monday, September 25.
“The price decline can partly be attributed to the slowdown in off-take by end-users owing to the festival holidays ahead. But, more significantly, there is negative sentiment regarding the growth of the manufacturing sector, while it is considered that HRC prices have shot up too high based on exports and not on domestic demand,” a Mumbai-based trader said.
“The optimism over exports of large steel mills and the resulting hiking of domestic prices is not working anymore. Under the new tax regime, exporters are having to pay tax now and claim refunds later on completion of export shipments, and this is locking up funds. Hence, the mood on the export front has been reversed,” the trader said. “With export volumes expected to dwindle, more volumes will flow into the domestic market, putting new pressures on prices as there is just no demand improvement to absorb higher supplies,” he added.
At least two other traders said that Indian HRC exporters over the past week increased their export offers by around $20/mt to $610/mt FOB, but no transaction has materialized, indicating that overseas demand has also slowed down.
$1 = INR 65.11