Faced with buyers’ resistance and impending import competition, local Indian integrated steel mills have started resorting to discounting cold rolled coil (CRC) prices in order to keep volumes moving in the market which has been witnessing falling trading activity, SteelOrbis learned on Monday, February 8.
Sources said that changing market dynamics indicate that standalone re-rolling mills will be among the first to trigger a price correction in the market by converting ex-China hot rolled coil (HRC) at lower import duty and reducing volumes of locally-sourced HRC purchased from integrated Indian steel mills, diluting the pricing leverage enjoyed by the latter over the past several months.
Sources said that, while base CRC prices have been maintained at INR 60,000-60,500/mt ($821-826/mt) ex-works, most integrated steel mills have been concluding supply contracts at a discount of INR 1,000/mt ($14/mt) to be able to keeping pushing volumes in the market at a time when large-volume buyers have been deferring deals and waiting for a correction to set into the market, triggered by imports.
According to a steel sector analyst, integrated steel mills are expected to feel pressures from higher-volume CRC supplies at more competitive pricing from standalone rolling mills now able to access cheaper ex-China hot rolled coils. He said that finished CRC imports are unlikely to see any uptick since such imports from Japan and South Korea are already at a zero rate of customs duty, and hence only rolling mills are expected to shift to ex-China HRC from local sourcing and to pass on lower cost benefits to their CRC consumers.
$1 = INR 73.00
