Pressures of correction have continued to gain momentum in the local Indian hot rolled coil (HRC) market for the second consecutive week, with prices decreasing by INR 500/mt ($8/mt) over the past week to around INR 32,700/mt ($503/mt), since the market reacted negatively to local mills’ decision to maintain base prices even in the face of dwindling demand and volumes, traders said on Monday, November 9.
“Although much anticipated, reports that local mills will maintain base prices unchanged during November have depressed sentiment in the market. This only helps the forces of correction to gain momentum,” a Mumbai-based trader said.
“With sluggish demand and end-users sharply reducing off-take to avoid inventory buildups, dealers are not sure of the next bottom level and have reduced fresh booking activity, leading to a sharp drop in market activity,” he added.
Some market sources said that in a few regions of India like the western region dealers are seen to be offering aggressive discounts of up to INR 2,000/mt ($3/mt), anticipating that the correction will gain further momentum and seeking to liquidate higher-priced stocks.
Meanwhile, some dealers report that HRC transactions at as low as INR 29,000/mt ($446/mt) have been concluded, reflecting the acute bearish sentiment in the market.
On the other hand, ex-China HRC offers have remained stable during the past week in the range of $290-300/mt CFR Mumbai for mid-December shipments, but few transactions have been reported in the market.
Sources said that most importers feel that offers will not be maintained unchanged through the current month and transactions are being deferred in anticipation of the next adjustment in such offers.