Local Indian hot rolled coil (HRC) prices have remained stable during the past week at INR 38,200/mt ($506/mt) ex-works even as trading volumes have improved in select northern and eastern regions, and supported by strong shipments overseas, SteelOrbis learned on Monday, May 11.
According to traders, easing of manufacturing restrictions in eastern and northern parts of the country has prompted market intermediaries to cautiously resume bookings, also in anticipation that the national lockdown will at least be significantly relaxed next week.
At least two traders said that some western Indian steel mills are reported to be pushing volumes into the market at discounts ranging 2-5 percent on base prices, but the trading volume is still on the low side but better than the trading conditions seen in April.
Market sources said that most large integrated steel mills have decided to maintain base prices for the second consecutive month. However, the stability of base prices has been more hinged on large steel mills’ success in increasing export volumes to sustain plant utilizations levels rather than on the slight revival in trading conditions in the local market where demand is expected to be squeezed further in the medium and long term as end-users do not have sufficient liquidity to restock significant volumes of raw materials, the sources said.
“The pricing dynamics in the local market can change very fast. Export growth seen over the past few weeks in the case of HRC shipments can be volatile. It is providing support now and most steel mills are operating at 30-50 percent capacity utilizations levels. Domestic pricing will be critical as steel mills start to increase plant capacities at a time of a prolonged demand recession as forecast,” a manager at an Indian mill said.
“I do not see HRC prices having a significant upside from current levels. Steel mills have to live with operating on very thin margins. End-users are resuming operations but, in overall recessionary conditions, they are unlikely to lock up funds in building up raw material inventories and this will restrict HRC volume movement in the market,” he added.
$1 = INR 75.50