Local Indian hot rolled coil (HRC) prices have continued to edge up for the fourth consecutive week as most steel mills completed upward base price revisions and the market is expecting the producers to raise their prices further in August, SteelOrbis has learned on Monday, July 27.
Market sources said that local HRC prices in India have consolidated at higher levels of INR 39,800-40,000/mt ($532-534/mt) ex-works, up by INR 500/mt ($6.7/mt).
According to traders, “short-term pent-up demand” has been surfacing in the market, leading to restocking by market intermediaries as well as by end-users.
However, a section of market sources said that higher prices coupled with higher trading activity are unlikely to be sustained over the medium term. A steel sector analyst at a Mumbai-based financial services firm said that steel mills are rapidly increasing HRC production and in the medium term supply-side pressures and oversupply would come to influence domestic pricing.
So far, the steel mills have been banking on rising overseas shipments to keep supply-side dynamics in check, but exports to China which account for the bulk of such shipments cannot be said to be sustainable, the analyst said.
At least two traders said that the current pricing strategy of large exporting steel mills is to push higher volumes of HRC overseas, but, since such sales are at lower margins, the producers are attempting to compensate for that with higher domestic selling prices, even though local demand is at a low ebb compared to the same month last year.
$1 = INR 74.80
