The downtrend in the local Indian hot rolled coil (HRC) market has gathered pace over the past week with traded prices sliding amid concerns of mounting inventories due to the combined pressures of low local bookings and a slowdown in overseas shipments, SteelOrbis learned from trade and industry circles on Monday, April 25.
Indian trade HRC prices are down INR 2,000/mt ($26/mt) to INR 73,900/mt ($968/mt) ex-Mumbai and down INR 2,500/mt ($33/mt) to INR 72,900/mt ($955/mt) ex-Chennai in the southern regional market.
“Trade prices are reacting negatively to inventory pressures from low domestic bookings and the fall in overseas sales,” a Mumbai-based steel distributor said.
“Present market conditions indicate that mills would possibly be forced to defer planned base price hikes for May, despite claiming a rise in costs. Our assessment is that trade prices will move in a narrow range going forward, on combined contrary forces of rising costs of mills and higher inventories. Dealers are in no hurry to make restocking bookings with producers, as most are waiting for a new bottom to emerge,” he said.
A Mumbai-based steel sector analyst with a financial advisory firm said that demand is taking a hit from very high prices and trade prices have fallen back from the historical peak early this year.
“We even expect demand to get into a negative zone by the end of the current quarter and steel prices will be under pressure even despite rising energy costs and the increased burden on mills. The possibility of mills lowering capacity utilization levels cannot be ruled out if the slowdown in overseas sales is sustained, leading to inventory build-ups at mills,” he said.
Sources said that early in the month mills had been planning a base price increase of at least INR 2,000/mt ($26/mt) in May, but such a move is being discounted by market participants in view of the rapidly bearish trend setting into the market.
$1 = INR 76.36
