Local India hot rolled coil (HRC) tradable prices have increased in line with the significantly higher base prices announced by integrated steel mills over the past week, but extremely thin trading volumes signal still weak market conditions, SteelOrbis learned from trade and industry circles on Monday, April 12.
Sources said that local tradable HRC prices have ranged at around INR 58,000-60,000/mt ($776-803/mt) ex-Mumbai, in line with higher base prices announced by producers, but most of the small-volume trades have been reported at the lower end of the range at INR 58,000/mt ($776/mt) and some reports have indicate stray deals at even INR 57,000/mt ($763/mt) ex-Mumbai.
The sources said that several key industrial regions around Maharashtra in the west and Delhi and Punjab in the north, and Karnataka in the south have been considering stricter lockdown conditions over the past week with most industries forecasting a reversal of demand greenshoots and a negative impact on industrial production in April.
Reports coming in indicate a beginning of an exodus of migrant labour from industrial regions back to their hometowns to avoid the spreading pandemic and have raised concerns of supply-side disruptions as seen during the peak of the pandemic last year, and hence most market participants prefer to stay away for making any fresh commitments, while end-users are unsure of maintaining plant capacity utilizations in April and so are staying away from raw material restocking.
“The second wave of the pandemic is definitely putting steel into a sectoral stagflation. On one hand, producers have been aggressively raising prices, while demand is not only stagnating but is poised to decline as regional governments are compelled to impose stricter lockdown conditions,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“There is a lot of talk in the market that local steel producers will resort to another base price hike in April. We are unable to assess such aggressive pricing and its impact when most end-use industries face uncertain demand in April and later. The situation is crazy and defies conventional market fundaments,” he said.
At least two large Mumbai-based traders and an official at a private steel producer said it was a clear possibility that integrated steel mills would go in for another round of base price increases in April after the INR 4,500-5,000/mt ($60-67/mt) hike announced last week.
A section of the market expects the second base price hike later this month to be around INR 2,000-3,000/mt ($27-40/mt).