Local Indian hot rolled coil (HRC) traded prices have continued to seek lower levels amid widening discounts from the weak cues of the global trend in finished steel and disappointment over the lack of any price support amid quiet trading conditions, SteelOrbis learned from trade and industry circles on Monday, November 29.
With the widening of discounts, the reference trade price is down to INR 68,800-69,200/mt ($918-924/mt) ex-Mumbai, marking a loss of INR 3,200/mt ($43/mt) from last week ago.
According to the sources, trading conditions have remained very quiet with mills expected to start announcing December base prices from the week ahead and the market’s disappointment that producers have not yet taken any initiative to support the market in view of the slowdown in stock movement in the local market and weak global cues.
It has been pointed out that, with the current traded price being at a significant discount to mills’ base prices averaging at up to INR 72,000/mt ($961/mt) ex-works, base price hikes have seemed unviable in the current market conditions and trade and end-use circles expect that a reduction in base prices could support sentiments.
“Following the significant loss in the traded price over the past two weeks, current HRC prices have moved to a premium over the landed cost of ex-China prices,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“Pressures from imports on local prices at the moment are limited only by mandatory port quarantine rules,” he said.
A Mumbai-based steel distributor said, “Market intermediaries are deferring all fresh bookings until such time as mills clarify December base prices. The lag between local prices and the global downtrend is closing up and, with prices set to fall further in December, buyers are waiting for a new bottom.”
However, sources at steel mills were still heard to be maintaining a contrarian view. “Margins of steel mills are under pressure of still high prices of imported coking coal and not high enough finished steel prices. Mills have also cut down on HRC exports following weak global price realizations. Under the circumstances, producers have very little scope to adjust prices and drive volumes in the market,” an official at a steel mill said.
$1 = INR 74.90