Indian HRC prices stable, gap with import offers narrows with stronger rupee

Hot rolled coil (HRC) prices in the Indian domestic market have been maintained at INR 36,250/mt ($655/mt), but the appreciation of the rupee against the US dollar has narrowed the gap between landed import and domestic prices by $10/mt, triggering expectations of price cuts by producers, an Indian trader said on Friday, August 24.
 
"The HRC market lacks direction on low volumes. With the rupee showing signs of strengthening, buyers are not inclined to make month-end commitments, preferring instead to either wait for domestic producers to cut prices in September or price gaps to narrow further before importing," a Mumbai-based trader said.
 
The rupee has touched INR 55.13 to a dollar during the week, the highest since August 9.
 
Import offers of ex-China HRC have been reported at $565/mt CFR Mumbai. In rupee terms, the gap between domestic and import prices has been reduced to INR 4,957/mt ($89/mt) from INR 5,539/mt ($100/mt) in the first week of the current month, the trader said.
 
"Domestic producers have been maintaining prices on back of support from the weakening rupee and ex-China offer prices not maintaining their levels. But with the rupee reversing its trend, buyers are now expecting producers to cut prices by $10-18/mt to maintain the current gap with imports and hence the lack of price movement in the market," a Kolkata trader said.
 
"Apart from currency, the expected pick-up in demand activity too will determine whether integrated mills set the direction by cutting prices or not. With Ramadan over, monsoon rains abating over the next two months and more festivals in October, a rush of demand might support current HRC prices," the trader said.
 
The Indian domestic HRC market will gain direction in September with clear indications from Chinese imports, with Chinese import offers currently maintaining their levels despite the announcement of production cuts following maintenance work by several mills in that country, an official at an eastern Indian integrated mill said.