Local Indian hot rolled coil (HRC) prices have continued to consolidate at higher levels, moving up INR 500/mt ($7/mt) week on week to INR 34,750/mt ($489/mt) ex-works as more large steel mills pushed through higher base prices on the back of lower import competition and the fall in mill’s inventories, SteelOrbis has learned.
According to traders, more large and medium-scale steel mills have increased base prices in reaction to India walking out of signing up to the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement of 15 countries, and the easing of fears of cheaper steel imports, particularly from China.
Domestic steel mills have gone in for two rounds of base price increases in the current month, market sources said, adding that this was the first time in six months that local steel producers have effected upward price adjustments.
“HRC prices are gaining largely on the back of sentiments and local steel mills’ expectations of lower import competition, rather than due to any fundamental change in demand,” a Mumbai based trader said.
“It is to be noted that the price is rising on extremely thin trading volumes in the market. End-users are still averse to large volume restocking. There is no certainty that higher prices will be sustained. Manufacturing sector growth as per government data is at a two-year low,” he added.
At least two officials at domestic steel companies said that mills’ inventories are down by a third in the current month compared to the start of the current year fiscal in April.
Both the officials said that demand generation or decline in the next quarter will determine whether the current high HRC prices can be sustained or not, adding that at least for now discount sales have been withdrawn by most producers.
$1 = INR 71.10