Local Indian hot rolled coil (HRC) trade prices have softened over the past week but the rate of decline has eased and discounts to lower base prices of mills have narrowed amid market expectations of stability emerging in reaction to local mills cutting production since mid-July to offset supply-side pressures, SteelOrbis learned from trade and industry circles on Monday, August 8.
Indian HRC trade prices have lost an average of INR 400/mt ($5/mt) across regional markets to INR 57,400/mt ($725/mt) ex-Mumbai and to INR 58,400/mt ($737/mt) ex-Chennai in the south.
They said that trade price discounts to base prices of mills have narrowed to a marginal two percent in most regional markets and are almost on a par in the southern region.
“Trade prices have reacted marginally following base price cuts announced by mills over the past week. Trade and base prices are on a par which is an indication of emerging market stability,” a Mumbai-based steel distributor said.
“Of course, trade volumes remain low. The fact is that mills have been steadily cutting back production since mid-July, offering support to prices in the form of lower supply-side pressure. But the demand depression is causing market demand and supply to balance at a lower level,” he said.
“Demand is slowing down and large end-use buyers are deferring supply contracts. Mills have no option but to either cut back production or go in for maintenance shutdowns of mills for supply and inventory management,” an official at a private mill said.
“Our assessment is that, under current market conditions, prices are at a bottom but at the same time there is very limited upside potential also. The next upside trigger could be if the much talked about withdrawal of the 15 percent export tax becomes a reality and mills get back to selling overseas actively,” he said.
$1 = INR 79.20