Downward pressure has gained momentum in the local Indian hot rolled coil (HRC) market for the second consecutive week, with prices falling by INR 750/mt ($11/mt) during the past week to INR 43,750/mt ($643/mt) ex-works as dealers showed resistance to higher price levels by continuing to reduce their bookings, traders said on Monday, January 30.
“Clearly the market has been unable to absorb the sharp increase in price levels since December last year. Expecting a further slowdown in demand from end-users, dealers are reducing their booking activity to avoid large inventory build-ups and this has set off a correction in market price,” a Mumbai-based trader said.
“Most market participants are also staying on the sidelines. Eyes are on the national budget to be placed before parliament on Wednesday, February 1, and the market is keen to see how far the government will go in boosting the economy, which has been showing signs of a slowdown,” the trader stated.
“Local HRC prices might also be reacting to the possibility that the Ministry of Steel may not extending the minimum import price once its current tenure ends on February 4,” he added.
Two other traders said that, despite mounting pressures on market prices, local steel mills could be expected to opt for another round of base price hikes of around INR 500/mt ($7/mt) next month as most mills claim that the January price increases have not fully compensated them for the rise in input costs. If so, the market could see a further dip in transaction volumes, the two traders added.