Local Indian hot rolled coil (
HRC) prices have remained stable during the past week at INR 38,500/mt ($560/mt) ex-works amid weak trading activity and uncertainty over the adjustment by steel mills of their base prices, traders said on Monday, November 28.
"Most market participants have continued to stay away from concluding any fresh transactions as they are unsure what will happen regarding the current liquidity crisis in the market," a Mumbai-based trader said.
"At the same time, there are very few indications of whether local steel mills will revise December base prices or not, adding to the uncertainty," the trader added.
While no definitive confirmation is available on pricing strategies of steel mills for next month, a number of traders said that they are hearing that mills are considering a hefty across-the-board hike in base prices for flat products of as much as $40/mt to offset rising prices of raw materials such as coking coal.
At least two traders said that such a big price adjustment will definitely damage the so-far strong market sentiment. They argued that the ongoing liquidity crisis following the government's demonetization of high value currency notes will have a long-term depressing impact on demand and under these circumstances the market will not be able to absorb the speculated price increase.
$1 = INR 68.72