Steady small volume bookings by end users and re-stocking by trade channels restricted the downtrend in local hot rolled coil (HRC) trade prices in India but it still remained at discount to lower mills’ base price announced over the past week, SteelOrbis learned from trade and industry circles on Monday, July 11.
A section of trade and distributors are back in the market committing small volume bookings anticipating trade price to have bottomed out in the current cycle which limited the fall in price at INR 500/mt ($ 6/mt) to INR 59,600/mt ($752/mt) ex-Mumbai and down a similar INR 500/mt ($6/mt) at INR 60,500/mt ($763/mt) ex-Chennai in the south.
This is compared to mills’ base price ranging INR 61,000-62,000/mt ($767-782/mt) after producers announced lower July prices.
“The declining price trend is plateauing and limited downside risks going forward is prompting trade channels to restock. But trade volumes are still small and demand improvement is still seen to be a constrained when user industries are facing inflationary pressures and unable to pass on their higher price to consumers,” a Mumbai based distributor said.
“But producers will continue to face challenges on the inventory side from steady fall in export volumes since April and faster fall since imposition of export tax in late May and there will still be an increasing volume availability in the market,” he said.
However, maintaining a more optimistic outlook an official with a private mill said, “Steel prices have bottomed out. There are several positive signals that based on numerous representations from domestic mills, the government is very likely to withdraw the 15 percent export tax on finished steel products and at the same time further increase export tax on raw materials which holds promise of lower input costs for steel producers.”
“We are also seeing greenshoots of demand improving from lower steel prices and this will help producers to push domestic sales and concerns over inventory build-up is slightly exaggerated,” he said.
$1= INR 79.30
