The rally in the local Indian hot rolled coil (HRC) market continued to follow the uptrend for the seventh consecutive week, gaining INR 500/mt ($7/mt) to INR 41,300-41,500/mt ($551-554/mt) ex-works on combination of rising demand among end users, anticipation of another base price increase by integrated steel mills in the current month and inventory drawdown to almost near pre-pandemic levels, SteelOrbis learned on Monday, August 17.
Traders and market sources said that inventory levels have been normalizing over the past several weeks and support from rising demand is expected to enable integrated steel mills to increase base price by another INR 500-1,000/mt ($7-14/mt).
Sources in industry said that estimated aggregate HRC inventory level at steel mills in July declined to around 13 million mt, which was close to levels just before the pandemic triggered lockdown.
Several bi-annual contracts signed over the past week between producers and buyers were concluded at minimal discounts in contrast to usual normal discounting in negotiated deals indicating long term sustainability of prices at higher levels.
“Integrated steel mills are benefiting from strong realizations from HRC sales at current prices with input cost pressures too remaining moderate. Near normal capacity utilizations of producers indicate improved fixed cost absorptions. Producers will be in a good position to consolidate this trend further by increasing prices over the next couple of months with monsoon season, a traditional weak period, coming to an end,” a steel sector report of a financial brokerage firm said.
$1= INR 74.90
