High supply and weak demand depress local Indian HRC market, but mills’ outlook positive

Monday, 19 July 2021 10:27:32 (GMT+3)   |   Kolkata

Local Indian hot rolled coil (HRC) sellers almost eliminated spreads between base price of steel mills and tradable price to keep pushing volumes amid weak market demand, SteelOrbis learned from trade and industry circles on Monday, July 19.

The tradable price edged lower to INR 67,500-68,500/mt ($905-918/mt) ex-Mumbai, at par with the base price of integrated steel mills, compared to peak traded price of INR 71,000/mt ($951/mt) ex-Mumbai since late June.

The sources said that there are a lot of volumes available at both mills’ end as well as with major distributors and premiums for ready delivery is not warranted in a slight oversupply situation in the market.

However, producers including integrated steel mills maintained that the price correction is entirely to trigger demand in the short term and low prices seen over the past week was “temporary adjustments and the market still had upside potential.”

“Yes, there is slight oversupply in the market and this is more of a seasonal variation. We see demand improvement in the coming quarter,” an official with Steel Authority of India (SAIL) said.

“It is to be noted that the landed price of imported HRC continues to be at least 10-15 percent higher than local prices. The differential is likely to widen further as export volumes of ex-China are falling. This coupled with anticipated demand uptick in next quarter will continue to provide local producers headroom to improve price realizations,” he added.

Buyers in key overseas markets too are increasing interest in ex-India HRC in wake of low offers from China and though price realizations from exports are still not optimal the improvement in volume shipments overseas will enable producers to offset risks of inventory build up and limit pressures on local prices, the official said.

Sources said that industry estimated Indian steel mills HRC overseas sales over the past week at 100,000 mt and hence risks of inventory pressures on prices is limited.

“The low price we are seeing now is largely because of sales slowdown in April-June. But we are seeing a strong demand emerging in July-September quarter. Our plants are operating at 100 percent capacity. We are looking at increasing prices in the coming months,” an official from one of producers said.

$1= INR 74.60

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