Local Indian hot rolled coil (HRC) official offer prices have remained stable during the past week at INR 38,200/mt ($507/mt) ex-works, but discounts offered by large integrated steel mills have deepened further amid continued thin domestic trading conditions, SteelOrbis learned on Monday, May 18.
Market sources said that, with the forecast the local demand will continue at its lowest levels amid uncertainties triggered by the extension of the national lockdown until May 31, domestic steel mills have increased discounts to the range of 5-7 percent, higher than the discounts of 2-5 percent in earlier weeks. As a result, mills have been ready to conclude contracts at INR 35,500-36,300/mt ex-works.
A number of market participants and end-user industries said that uncertainties over supply chain management are expected to become more complex and challenging now that the central government has delegated the demarcation of Covid-19 case intensity zones to state governments and the categorizations of such zones will change dynamically depending on the decisions of various state governments, while supply chains across states would become difficult to manage for dispersed manufacturing industries.
Under the circumstances, manufacturing industries spanning across regions could not be expected to restock raw materials like HRC at central warehouses as supplies to plants will be very different from now onwards, traders said.
Sources at local steel mills said stable HRC base prices for the past three consecutive months, since the national lockdown was announced, are not an effective benchmark price as most producers are using negotiated discount rates to push volumes into the local markets.
$1 = INR 75.40