Local Indian hot rolled coil (HRC) prices have declined by INR 300-500/mt ($5-8/mt) during the past week to around INR 40,500/mt ($645/mt) ex-works as dealers have sought to adjust prices to cope with falling volumes, traders said.
"Transaction volumes have fallen sharply during the past week, indicating that outlook for HRC demand has been very negative. The downward adjustments were highest in the northern and western regions of the country, the two most important markets," a Mumbai-based trader said.
"The market seems to have been taken aback that contrary to expectations for a demand uptick, demand and trading volumes are actually falling rapidly, forcing dealers to lower prices so as to avoid high stocks before the festival season starts," he said.
Sources said that the slowdown could worsen unless local steel mills adjust base prices to keep volumes moving in the market.
The steel mills, which are fighting rising input costs, particularly the high price of domestic iron ore at a time when global prices are falling, are expected to decide on a new pricing strategy at the end of this month or after the festival season, the sources said.