Indian HRC prices under higher pressure from import offers, discounts rise

Indian hot rolled coil (HRC) prices are under severe pressure from the sharp fall in import offer prices, forcing domestic producers to extend higher discounts of INR 1,100/mt ($20/mt) on their unchanged base price of INR 36,250/mt ($650/mt) ex-works, traders said on Friday, August 31.
 
"Ex-China HRC import offers have decreased by $10/mt to $540/mt CFR Mumbai for September shipments, but no orders have been concluded, with buyers demanding a further reduction of $10-15/mt," a Mumbai-based trader said.
 
"With domestic demand very weak, import volumes are low, but buyers are able to negotiate higher discounts from domestic producers following the fall in import offers," he added.
 
The reduction in the import price for HRC of Chinese origin is in contrast to previous reports that production cuts following maintenance shutdowns of mills in China would provide support for international prices, according to a Kolkata trader.
 
"The HRC market is on a knife-edge between the deluge of imports or a hefty price cut by Indian integrated steel mills," he said.
 
"Volumes are also low since buyers and traders are making bookings in line with month-end considerations.  Pricing committees of large steel mills are scheduled to meet early next month and a pricing decision from them would set directions for the market," he added.
 
Due to the difference between import and domestic prices, discounts in the domestic market have reached INR 5,000/mt ($90/mt) and these discounts are expected to be maintained by Indian producers since any further reduction of about $20/mt in Chinese HRC may trigger a flood of imports, a marketing official in a government-owned steel mill said.
 
Excepting the weakness of the rupee, the fundamentals of the market do not offer any protection to domestic HRC producers and the divergence in international and domestic price movements may narrow over the next two months, a trader said.
 
The minimum that HRC buyers expect for next month is for producers to reduce the domestic base price equivalent to the INR 1,000-1,100/mt discount currently being offered, he added.
 
According to government data released on Friday, Indian finished steel imports in the April-July period of this year increased by 53.3 percent year on year to 2.88 million metric tons.