The prolonged downtrend seen in local Indian hot rolled coil (HRC) prices has been reversed over the past with trade level prices showing modest gains as distributors have attempted to improve margins amid widespread reports that major producers are considering market-support initiatives for August, SteelOrbis learned from trade and industry circles on Monday, August 4.
Sources said that trade HRC prices are up a marginal INR 200/mt ($2/mt) to INR 48,900/mt ($562/mt) ex-Mumbai and have gained INR 300/mt ($3/mt) to INR 50,700/mt ($581/mt) ex-Chennai in the south.
According to the sources, the market has been rife with talk that large mills are considering putting into play some support initiatives which could be either reductions in base prices, extended credit terms or discretionary volume-based discounts to ensure faster movement of stocks through the supply chain.
In an early response, distributors have been heard to be testing the market by increasing prices at the trade level, but initial indications were of further declines in trade volumes, indicating a fundamental demand weakness and end-users' reluctance to accept even the marginal price hikes, the sources said.
“The slight improvement seen in the market is most unlikely to sustain. Market intermediaries are acting ahead of the curve by attempting to improve margins banking on some market support measures from producers. This can only have very limited impact because the long bearish conditions are rooted in fundamental demand weakness in industrial manufacturing,” a Mumbai-based distributor told SteelOrbis.
“There will be more clarity on price support measures over the next few days. At best, we can hope to see sideways movement in prices amid continued thin trade volumes,” he added.
$1 = INR 87.30