The Indian domestic flat steel market has continued its stable trend. With new production materials being added to already-high inventories, the supply side is getting gradually stronger. However, local demand has yet to reach desired levels against the strengthening supplies. Local Indian producers' offers for hot rolled coils (HRC) are heard to be standing at INR 31,000-32,000/mt. During the past week, buyers, who had adopted a wait-and-see policy as regards new production offers, have started placing orders as of this week. The general opinion in the market is that prices will increase further.
On the import side, news from China early this week has affected the Indian flat steel market. Restrictions on power usage implemented by the Chinese government in order to prevent environmental pollution and the closure of nearly 300 small enterprises may be seen as an effort to control inventory levels. At this point, the reduction in production outputs has caused hot rolled coil prices in China's domestic market to increase. The increase in Chinese domestic flat steel prices has this week been reflected in export offers, with Chinese export offers for hot rolled coils (HRC) rising by $15-20/mt as compared to last week. SteelOrbis has been informed that ex-China offers to India for boron-added hot rolled coil (HRC) are at the price level of $635/mt FOB, while offers for non-boron-added HRC stand at $695/mt FOB - both for late September shipment. Of course, the main beneficiaries of this situation in terms of making profit are the Chinese stockists. Offers from another supplier of the Indian market, the CIS flat steel producers, are not considered to be workable by Indian buyers due to the freight costs and lead times involved.
Factors such as the sluggishness seen in the local market demand and the increase in supplies encourage Indian traders to turn to exports. As mentioned in previous analyses, Indian traders who turned towards Europe and the Middle East markets are giving competitive offers. Although offers to the European markets have not yet found acceptance, considering that demand will get stronger in the coming days, it is possible to hear a few transactions. Meanwhile, Indian traders' offers to markets in the Middle East and Africa have found acceptance and there have been some transactions, especially for galvanized coils.
While end-user demand in the Indian flat steel market is stable, the export markets are gradually recovering. Import offers to India are still on the high side for Indian hot rolled coil buyers and so they prefer to make their purchases from the domestic market. It may be said that the pressure from China on the Indian flat steel market has been removed. In this context, it is heard that local market players will speed up their purchases, considering that Indian mills may increase their prices further.