The stagnation seen in the Indian market for weeks has this week been replaced by some trading activity, albeit at low levels. The recovery of end-user demand and the high levels of import prices have forced finished product consumers and stockists to make purchases from the domestic market. The recovery seen in demand has provided support for the Indian producers which have sought to increase their offers, and so October production flat steel prices have shown increases of INR 1,000-1,500/mt ($23-24/mt). Indian producers are currently offering hot rolled coils (HRC) at an average price level of INR 32,750-33,500/mt ($741-758/mt), while cold rolled coil (CRC) offers are at the level of INR 38,500-39,000/mt ($871-882/mt). Market players are now watching to see how buyers will respond to these price increases in the coming days.
SteelOrbis has heard from some traders that buyers faced with the newly increased prices may turn toward imported materials and thus potential Chinese pressure on the market could lead Indian producers to reduce their prices again. Other traders think that the steel markets, having entered a rising trend, will not decline, but will at least maintain a sideways trend and then could experience some slight increases. All will become clear in the coming weeks. The import market is currently seen to be relatively weak. Given the lead times, buyers prefer to buy from the domestic market. Even if they need to purchase imported products, they can always supply their needs from local stockists, since inventories in India are full of position purchases from months back.
It is also hard to describe the export side as being strong. Because of the weak trend of international demand and the lack of demand from Europe and the Middle East, the export market is still not very active. The increase in value of the Indian rupee against the US dollar can definitely be considered as a negative factor for exports. In the same way, if the rupee continues to gain value against the dollar, the volume of ex-China import offers may increase and so a decrease may be seen in ex-China offer levels. In this event, the increasing strength of imports may put pressure on local Indian producers and lead them to revise their prices. It is heard that the market players who think like this prefer a wait-and-see approach and are expected to start purchasing after prices trend sideways for a week or two.