Prices have continued to drop in the Indian domestic market for flat rolled steel products. As mentioned in our earlier analyses, many Indian producers had reduced their offer levels by early November compared to their offers in the previous month. This strategy, preferred by steel producers in order to overcome the weak trend in the market, appears unlikely to succeed before buyers' inventory levels hit the bottom. The fluctuating market trend is causing buyers to refrain from new bookings for the moment. Trading activity is expected to remain in a weak state until offer levels gain some stability.
Looking at the base prices of hot rolled coil, offers in the domestic market stand at INR 31,000-31,500/mt; however, prices above these levels also exist regionally. End-users prefer to buy minimum tonnages sufficient to meet their urgent requirements. Coming closer to the end of the year, most market players in India are trying their best to avoid large tonnages as the future of the market continues to be blurred.
On the import side of the market, a similar trend is observed to that in the domestic market. China, always as an important exporter in the region, is influencing the Indian flat rolled import market as well. As the Chinese domestic market has strengthened in terms of prices, import offers to India have consequently followed suit. In this context, continously fluctuating price levels result in a variety of offer levels in India's flat steel import market.
Russian mill Severstal has been making aggressive offers to India recently, thus attracting a good amount of sales. Thanks to this sales volume, Severstal has filled its order books for December production and has stopped receiving orders. Furthermore, according to market information last week, the Russian producer sold hot rolled coils to an Indian buyer at $610/mt CFR. With this offer regarded as a workable price level in today's market conditions, Russian offers are expected to rise further in the coming days.
Japanese mills have of late been offering cold rolled coils at quite competitive levels. As indicated by traders, offers from Japan and South Korea are $20-25/mt lower than Chinese offer levels, thus winning the race for buyers' attention.
To sum it all up, uncertainty continues to prevail in the Indian flat rolled steel market. The decreasing trend in domesic offers is expected to last for some more time. Against the increasing Chinese offers, there appear to be little possibility that Indian buyers will conclude bookings. Indian buyers are rather focusing on evaluating offers coming from other Asian markets for the time being.
In view of the strong performance of the rupee against the US dollar subsiding in recent days, import offers may lose their charm to some exent and this may lead to a certain revival of demand in the currently weak domestic market in India - provided that Indian producers succeed in making timely and attractive offers. However, it must be concluded that real demand needs to revive in the first place.