Local Indian hot rolled coil (HRC) trade prices have showed a weakening trend reacting to sluggish demand from end-user industries and negative sentiments over the slowdown in exports faced by local mills and the prospects of more material flowing into the local market and increasing supply-side pressure on prices, SteelOrbis learned from trade and industry circles on Monday, April 17.
Indian HRC trade prices have slipped by INR 200/mt ($2/mt) to INR 60,000/mt ($730/mt) ex-Mumbai and are down INR 300/mt ($3/mt) to INR 58,600/mt ($713/mt) ex-Chennai in the south.
Sources said that the local market has remained under mounting pressure from slackening demand from end-users and trade channels reducing fresh bookings to a bare minimum amid high stocks at dealers. At the same time, the mood has been further dampened by the sharp slowdown in overseas sales by mills raising the prospects of diverting export allocations for local sales, putting prices under increased pressures.
“At the start of the current quarter (April-June), most mills increased export allocations by an average of 10-15 percent, being bullish over the strong demand led by buyers in Europe. But the situation has been reversed over the past two weeks or so as more cheaper alternatives have emerged,” a steel sector analyst with a Mumbai-based financial services advisory firm said.
“There are distinct risks of these higher volumes getting diverted for local sales. Higher supplies will depress prices in a low-demand market. Also, mills have been too aggressive in hiking base prices over the last two months. The market is now showing signs of strong resistance,” he said.
At least two officials at private mills said that overseas market operations are being continuously assessed and any decision on a planned increase in base prices in April is being kept in abeyance, at least for a week or so.
Market sources said that mills had planned another base price increase of at least INR 1,000/mt ($12/mt), but this does not seem a possibility under the rapidly evolving bearish market conditions.
$1 = INR 82.20
