For the first time in 10 months, Indian integrated steel mills have cut local hot rolled coil (HRC) base prices by INR 1,000/mt ($14/mt) amid a combination of lower input costs, rising inventories at market intermediaries, the moderation of demand from some end-user industries and increased import bookings previously, SteelOrbis has learned from traders and industry circles on Monday, March 8.
The sources said that, following the downward revision, the effective HRC base price fell to INR 52,500-54,000/mt ($719-739/mt) ex-works compared to INR 53,500-55,000/mt ($733-753/mt) ex-works a week ago.
The move by producers to prune base prices has been reflected in HRC tradable prices, which have moved down by around INR 1,500/mt ($21/mt) to INR 53,500-55,500/mt ($733-753/mt) ex-Mumbai, with sources saying this is an indication of a lack of appetite among dealers to restock and of the weakening off-take from end-use industries.
“A correction in local HRC prices has been on the cards for long. Producers are attempting to drive demand by passing on the benefits of the slight fall in input costs to consumers,” a steel sector analyst at a Mumbai-based financial services firm said. “Local HRC prices are still about 40 percent higher on year-on-year basis. This offers space for correction,” he said.
A section of the market sources believe that the import competition may not see a significant rise in the near future in view of the strong demand sustaining in China and possible production cuts by Chinese steel mills, which will enable Indian local producers to regain pricing power.
At least two traders averred a lull has been appearing in demand from key industries like pipe and capital goods manufacturing industries and that the low off-take is resulting in an inventory build-up at dealers and that HRC producers are attempting to incentivize fresh bookings by lowering base prices.
$1 = INR 73.00
