Local Indian hot rolled coil (HRC) prices have moved sideways during the past week at INR 33,000/mt ($517/mt) ex-works amid nervousness over cuts in import offers and expected volatility in the currency markets, traders said on Monday, June 29.
"Over the past week local HRC prices have remained stable but market activity has been at very low levels. Most buyers have been waiting to see a direction in prices before concluding any new deals," a Mumbai-based trader said.
"While most local steel mills have held on to their current base prices, their medium-term pricing strategy is still not precise amid falling import offers and uncertainty over how the expected choppy conditions likely to hit the Indian rupee," the trader added.
Market sources said that ex-China HRC offers have declined by $10-15/mt in sharp response to the Indian government increasing import duty on flat products to 10 percent from 7.5 percent earlier. However, the sources said that importers are cautious about concluding transactions in the face of uncertainties regarding the Indian rupee and this has provided some support for local HRC prices.
The Indian rupee is expected to face turbulence due to the Greek crisis and the resulting rise in value of the dollar and a section of the market even forecasts the rupee depreciating to levels of INR 67 to the dollar in the short term, from INR 63.84 at present.
Most market participants are expected to remain on the sidelines and keep a close watch on prices, reacting to the combination of lower import offers and the weakening of the rupee, sources said.
Nevertheless, some traders said that, with the upside of the Indian rupee severely limited in the medium term in view of global currency markets, the exchange rate will continue to keep imports under check and enable local mills to continue to keep base price stable.
$1 = INR 63.84