The deepening correction in the local Indian hot rolled coil (HRC) market has continued to drive trade prices lower amid low trading volumes during the ongoing festival week, but market participants are optimistic that the next upturn will be triggered by producers hiking base prices over the next few weeks, SteelOrbis learned from trade and industry circles on Monday, October 23.
Sources said that trade HRC prices have slipped INR 900/mt ($11/mt) to INR 57,500/mt ($691/mt) ex-Mumba and are down INR 500/mt ($6/mt) to INR 58,300/mt ($701/mt) ex-Chennai in the south.
They said that trade channels have been quoting lower prices to liquidate inventories and improve cash flows during the festival season.
Even though trade prices have been cooling for the past two consecutive weeks, market participants still maintain a positive outlook claiming that the next upturn will be led by mills hiking base prices over the next few weeks citing the rising cost of imported coking coal.
According to market insiders, Indian mills could increase base prices by INR 1,500-2,000/mt ($18-24/mt) and the only question is whether the producers would implement the increase in one go or adopt a calibrated approach and spread it over two phases.
“Price increase by mills will be supported by easing of import competition. The Indian government is moving towards more non-tariff barriers to imports in the form of stricter quality control measures, which are expected to impact imports from China and Vietnam, even as global prices are softening steadily,” a Mumbai-based distributor told SteelOrbis.
“Demand is also expected to improve after the festival holidays. Hence, the correction that we are seeing for two weeks will reverse starting in November,” he added.
$1 = INR 83.20
