Local Indian hot rolled coil (HRC) prices have moved down to around INR 40,750/mt ($681/mt) ex-works, with steel mills having started to lower their prices for April by around INR 750/mt ($13/mt), traders said on Wednesday, April 2.
According to market sources, the downward price adjustments have been started by steel mills like JSW Steel Limited and Essar Steel Limited both of which have announced lower prices for the current month. JSW Steel announced yesterday, April 1, a reduction of INR 500-750/mt in its HRC prices, effective immediately.
The sources said that, while other large steel mills, including Steel Authority of India Limited (SAIL) and Tata Steel, have not lowered prices yet, they too are expected to follow suit later in the week since most steel companies usually adjust prices in tandem.
Jayant Acharya, commercial and marketing director of JSW Steel, said that local HRC prices have been lowered by the margin in question in order to bring them into line with the landed price of imported HRC and also because demand during the last quarter improved and that the company expects domestic steel consumption to increase by 5-6 percent in line with the projected growth in the country's gross domestic product (GDP) during the current fiscal year.
Market sources said that the expected HRC price cut disappointed traders who were expecting a higher reduction in prices considering that steel producers' margins had improved due to the lower cost of imported coking coal combined with the appreciation of the rupee, which further reduced the landed price of the raw material.
The markets were expecting HRC prices to be lowered by INR 1,000-1,500/mt ($17-25/mt) to have any material upside push to demand and volumes, the sources said.
The sources also stated that a higher price cut expectation was based on reports that several steel mills have booked imported coking coal for around $125/mt for the April-June quarter, substantially down from $143/mt during the January-March quarter.