Indian hot rolled coil (HRC) prices have consolidated at Rupees 34,000/mt ($645/mt) as producers pulled back volumes discounts in a range of $10-20/mt following reports of lower October production and the firming up of Chinese and South Korean offers, traders said on Friday.
"Positives have surfaced in the domestic HRC market after a long interval. Discounts are not heard of. October-November supplies are expected to tighten on reports of cutbacks in production by Tata Steel and JSW Limited," a Mumbai-based trader said.
"The anticipated fall in production and availability of HRC coincides with healthier demand during the festive season of October-November. There has been no talk of price cuts by producers either. On the contrary, HRC prices in the domestic spot market have the potential to move up by Rupees 500-1000/mt ($10-20/mt)," the trader said.
"However, whether producers will be able to sustain demand without discounts will depend on import price offers. South Korean and Chinese offer prices moved up $10-20/mt in the past week which was another positive," he added.
Bookings for ex-China HRC was reported at $560/mt CFR Mumbai, traders said.
However, expressing a contrarian view, a Kolkata-based trader said that expectations of a pick-up in demand and prices may be exaggerated.
"Korean and Chinese steel mills have far greater flexibility in passing on current lower input costs in their export prices. Indian steel mills are still coping with higher input costs of iron ore, low availability of coking coal and tight credits from banks," he said.
The trader went on to state that demand during October-December is expected to increase, but that much of this demand will be met through exports if international prices are maintained at current levels and if domestic prices continue to fluctuate within a narrow range of $10-15/mt, since domestic prices would continue to be higher.