The downtrend in local Indian hot rolled coil (HRC) market has gained momentum over the past week, with bigger price decreases seen as buying interest has faded and mills and distributors have sought to increase discount levels with inventory liquidation becoming the prime focus, SteelOrbis learned from trade and industry circles on Monday, July 28.
Sources said that HRC trade-level prices have lost INR 800/mt ($9/mt) to INR 48,700/mt ($563/mt) ex-Mumbai and are down INR 1,000/mt ($12/mt) to INR 50,400/mt ($583/mt) ex-Chennai in the south.
According to the sources, both producers and market intermediaries have reported sharp increases in inventory levels as buyers have continued to desert the market, forcing sellers to increase discounting to check inventory rises and resultant higher stock-carrying costs. It was learned that mills are offering discounts of around INR 2,000/mt ($24/mt) to get confirmed bookings, while distributors have been offering discounts of INR 2,500/mt ($29/mt).
“The mood and actual market conditions are getting worse and worse. There is desperate discounting going on at every link of the supply chain to keep some sales going. We do not see any improvement round the corner either as there are no positive external drivers evident from demand or the manufacturing sides,” a Mumbai-based distributor said.
“The market is keeping a close watch on mills’ base pricing strategy for August. While any market-support moves by producers by dropping base prices are mostly ruled out, the latter at best can be expected to maintain base prices. Either way, we see a further short-term downside of at least INR 1,000/mt ($12/mt) at the trade level,” he added.
$1 = INR 86.46