Over the past week, prices in the local Indian hot rolled coil (HRC) market have reversed their previous bullish trend, with prices decreasing by INR 1,000/mt to INR 39,000/mt ($608/mt) ex-works, on the back of a combination of a demand slowdown, high inventories at dealers and uncertainties over domestic steel mills’ base prices, traders said on Monday, September 18.
Market sources said that, while two large mills have already announced a base price hike for current month deliveries, others have not yet made any formal announcements.
The fact that several large mills have desisted so far from hiking HRC base prices showed divergent trends among steel mills and fears among some HRC producers that the demand slowdown will not permit the market to absorb any further rise in base prices without risking a high inventory buildup at mills.
“All dealers are facing a significant fall in off-take by end-users and resultant rise in their own inventories, putting pressure on prices and bringing the recent surge in prices to a halt,” a Mumbai-based trader said.
“Dealers are extremely cautious about making fresh bookings. In fact, I feel that, if current high price levels persist along with high inventories, dealers will soon resort to discounting,” the trader added.
At least two other traders said that there have been reports in the market of a sizable volume of HRC import contracts being concluded during the past week in view of the high domestic prices, and that this too has had a negative impact on domestic prices.
$1 = INR 64.13