The trading volume has fallen during the past week in the local Indian hot rolled coil (HRC) market and discounting has resurfaced as an indication of higher prices facing resistance from buyers, SteelOrbis learned on Monday, February 17.
According to traders, the increase in base prices announced by large Indian steel mills has not been accepted by the market and reports have indicated that a large number of integrated steel mills are offering discounts in the range of INR 450-550/mt ($6-8/mt) on the INR 39,250/mt ($550/mt) ex-works price level.
The traders said that market intermediaries have been almost absent from the market and have not been in the mood to restock at higher price levels as most are already carrying higher levels of inventories and end-users have also not been willing to lock up working capital in building up inventories as the fiscal year draws to a close.
“The demand revival is not strong enough to support the cost push on HRC prices being implemented by local steel mills to protect margin realizations at the close of the current fiscal year. Volume discounting is inevitable by large steel mills to check the counterproductive fallout of inventories mounting as trading volumes fall,” a Mumbai-based trader said.
“On the positive side, flat steel imports fell five percent during January 2020 over the corresponding month of the previous year and the trade circles estimate imports will sustain their downtrend in the current month, providing some support to local HRC prices,” he added.
$1= INR 71.30