Local Indian hot rolled coil (HRC) trade prices have remained under pressure as negative sentiments spread across markets in reaction to the negative reports on key indicators like inflation data, bank interest rates and energy costs, and are expected to weigh on the growth of key user industries, SteelOrbis learned from trade and industry circles on Monday, November 14.
Sources said that, though HRC trade prices have remained relatively stable ex-Mumbai, inching down by a marginal INR 100/mt ($1/mt) to INR 56,000/mt ($693/mt), higher decreases have been reported from other regional markets, falling by a significant INR 700/mt ($9/mt) to INR 55,750/mt ($690/mt) ex-Chennai in the south.
“Local bookings are seeing a sharp fall both from trade channels and end-users. There is a matching increase in inflow of imports, which are very competitive on landed-price basis,” a Mumbai-based steel distributor said.
“But the biggest worry is the negative macro indicators matched by the central bank directing a continued higher interest rate regime. This will offer a lot of headwind to growth in key industrial sectors. Hence, neither traders nor industrial users are keen on increasing inventory levels, leading to a fall in bookings and trade activity,” he said.
At least two officials at private mills confirmed the increase in inventory levels since early November and, even though producers have maintained base prices in November, a cut is not ruled out in November if stock movements do not improve over the next few weeks.
“Lower export allocations for the current quarter have increased inventory pressures on most mills. We will have to take this into account once our pricing committee meets to determine December prices,” one official conceded.
Two traders said that they felt that current market expectations indicated a base price reduction of INR 1,000/mt ($12/mt) in December was a distinct possibility as a turnaround of the bearish trend could be discounted in the short and medium terms.