Local Indian steel mills have kept their hot rolled coil (HRC) prices unchanged during the past week at INR 39,050/mt ($524/mt) ex-works, but their discounts have deepened further as producers have become more aggressive in destocking as the current fiscal year draws to a close and the price recovery seen earlier is being reversed.
More steel mills, secondary and integrated, have been increasing their discounts to around INR 850/mt ($11/mt) during the past week compared to the discounts on offer at INR 750/mt ($10/mt) early in the month.
Almost all domestic steel producers have been focusing on bringing down inventories ahead of the end of the fiscal year on March 31 in view of slow bookings by end users and re-rollers and uncertainties over pricing for April deliveries, SteelOrbis has learned.
“There is a lot of fear factor in the market with cases of coronavirus increasing in India and no one is sure how this will impact economic activity. Even in the best-case scenario, the price recovery in the steel market has been pushed back for two to three months at least,” a marketing manager at state-run Steel Authority of India Limited (SAIL) said.
“There is no clear indication as to how things will unfold in the coming days. This will make it very difficult for steel producers to determine their April pricing strategy. As of today, base HRC prices can go either direction in April,” he added.
However, according to an official at JSW Limited, while discounting will help push volumes and lower inventories, in the medium term steel companies would need to absorb the higher cost of imported inputs like coking coal in view of the Indian rupee falling to a record low against the US dollar at INR 74.50 to the US dollar during the past week and forecast to breach the INR 75 to the dollar mark in the short term.
$1 = INR 74.50
