Indian HRC prices stable amid poor market sentiment and demand

Indian domestic hot rolled coil (HRC) prices have remained stable this week at INR 34,000/mt ($621/mt) ex-works, with the support of the slight firming observed in ex-China HRC offers, traders said on Friday, September 14.
 
"Chinese HRC offers have risen modestly by $5/mt to $530/mt CFR Mumbai. After reducing prices last week, Indian mills have been able to maintain their price level, but expected discounts to clear inventories have not been heard in the market," a Mumbai-based trader said.
 
"Ex-China prices have been varying across a large band for the past few weeks. The current firming up is too small to predict a reversal of the falling trend or that pressures from imports will ease on domestic producers," he added.
 
Some western Indian steel mills after reducing prices last week refrained from offering negotiated discounts to large buyers to reduce inventories, anticipating a demand pick-up in September-October, two Kolkata traders said.
 
However, domestic consumption trends have been disappointing and the market rebound predicted for September has not materialized so far. Quoting provisional figures released by India's Ministry of Steel, the traders said that domestic steel consumption was down in August by 2.06 percent on month-on-month basis at 6.64 million mt.
 
"The market is not sure how much the consumption fall is from the general macroeconomic slowdown or due to seasonal causes, and hence the low volumes of trade in the market," the traders added.
 
The downside of domestic prices has been limited since mills have been hamstrung as regards further reductions by the rise in transportation costs following the government hike in fuel prices and low expectations of interest rate cuts by India's central bank against persistent inflationary pressure, the traders said.
 
The margins of Indian producers are already under pressure from rising energy costs, disruptions in coking coal supplies, shortage of iron ore, and cheap imports. Domestic demand during the festive season ahead is expected to determine the fundamentals of pricing but persistent negative consumption would force producers to revert to offering $15-18/mt discounts again to keep moving inventories into the market, an official at an eastern Indian steel mill said.