Prices in the local Indian hot rolled coil (HRC) market have declined by INR 1,000/mt ($14/mt) during the past week to INR 41,000/mt ($608/mt) ex-works, since the market has started to show signs of resistance to sharp price hikes announced by Indian mills earlier in the month, traders said on Monday, December 12.
“Clearly the $44/mt hike in base HRC prices by local steel mills earlier in the month has not been accepted in the market. The sharp upturn in dealer prices seen earlier has also been reversed during the past week as prices have been lowered and transaction volumes have fallen,” a Mumbai-based trader said.
“The current demand situation has not been strong enough to absorb such a stiff hike by Indian steel mills. The demand outlook is also negative due to the demonetization of high-value currency notes and the subsequent tight liquidity faced by all market participants,” the trader said.
“I would not be surprised by local HRC prices facing a further $15-20/mt downside from current levels with the correction gaining momentum and a high inventory build-up at the dealers’ end,” he added.
Market sources have pointed out that, with the price revision by Indian steel mills, the price gap between the landed cost of imported HRC and domestic HRC products has narrowed sharply, impacting demand for domestic products.
According to estimates provided by these sources, the landed cost of imported HRC is around INR 45,000/mt ($668/mt) as compared to $608/mt for domestic products. While the current price difference is around $60/mt at present, last month it was around $149/mt.
$1 = INR 67.63