The local Indian hot rolled coil (HRC) market has showed signs of cooling down over the past week with sentiments among end-users becoming cautious as regards fresh bookings and with tradable prices falling, sources told SteelOrbis on Monday, January 25.
The sources said that premiums on large-volume bookings largely being withdrawn in several regional markets have resulted in tradable prices moving down, even as reports available in the market indicate that integrated steel mills may be deferring their planned second round of base price hikes for January in order to reassess market conditions next month.
End-users in medium and small-scale industries have become extremely cautious about building up raw material inventories at the current historically high prices in order to preserve cash, although most market participants have indicated that it is still too early to view the current softening in prices as a portent to a correction being seen in the market in the near term.
Market sources said that, while integrated steel mills have maintained base prices at around INR 52,500-53,500/mt ($719-733) ex-works, ex-Mumbai tradable prices have been reported in the range of INR 55,500-56,000/mt ($760-767/mt) ex- works, compared to levels of around INR 56,000-57,000/mt ($767-781/mt) a week ago.
“There is some decline in trading activity and prices for the first time in several months, partly triggered by the softening of prices in China and local market participants expecting a spillover effect in domestic trade conditions too,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“The softening in market conditions might delay the planned January base price hike by producers. But our assessment is that fundamental demand still remains strong and downside risks to prices are limited. Users are cautious in spending on building high inventories, but producers will still cite rising input costs to hike base prices, in a few weeks if not immediately,” he added.
$1 = INR 73.00
