Local Indian hot rolled coil (HRC) prices have stabilized at higher levels of INR 40,000/mt ($645/mt) ex-works during the past week with all domestic steel mills announcing price increases during January, though volumes have continued to remain depressed, traders said on Thursday, January 23.
According to a Kolkata-based trader, while prices have stabilized at higher levels sentiments and demand have remained depressed, being reflected in very low bookings by market intermediaries.
Even the outlook is bearish considering that steel demand has grown just 0.4 percent while production was up 3.2 percent during April-November 2013, indicating a surplus situation in the domestic market, the trader said quoting government data.
With about 13 million mt of additional capacity coming into production during 2014-15, there will be "turmoil" in the market with excess capacity on the one hand and high prices on the other, he added.
Market sources said that one of the reasons for the strange conditions of low demand and high prices was the increasing focus of mills on export markets in Europe and the US and the shipping of part of excess capacity overseas despite facing local resistance in form of low volumes.
The sources said that domestic steel mills had increased HRC export offers by $10-16/mt on FOB basis in January over $545/mt offered in December 2013.