Pointing to sluggish demand sluggish and high stocks at market intermediaries, some local Indian steel mills have rolled over their hot rolled coil (HRC) base prices for September deliveries, while some others have reduced them closer to the tradable level, which had been going down over previous weeks, SteelOrbis learned from trade and industry circles on Monday, September 6.
ArcelorMittal Nippon Steel Limited (AMNS) has announced that it will keep base prices for September deliveries at INR 67,000/mt ($918/mt) ex-works and above. State-run Steel Authority of India Limited (SAIL) has also decided to keep base prices of HRC unchanged, at INR 67,000-68,000/mt ($918-931/mt) ex-works.
According to the sources, other steel mills will also follow suit over the course of the current week to keep base prices unchanged, though there are reports in the market that one private mill has lowered prices by up to INR 1,500-2,000/mt ($20-27/mt), bringing its prices close to the tradable level.
However, several market intermediaries pointed out that, though base price increases may have been avoided in the current month, even unchanged or discounted prices have not triggered strong renewed trading in the market.
Mills are under pressure to liquidate stocks and distributors are also seeing a rise in inventory levels and these factors have continued to keep HRC traded prices depressed. Unless there is significant demand uptick from end-users by mid-September, discounting could get more aggressive, sources said.
The tradable HRC price is around INR 66,000-66,500/mt ($904-911/mt) ex-Mumbai, almost stable from last week, while a traded price as low as INR 65,000/mt ($890/mt) ex-stocks was seen in the southern regional market around Chennai.
“Prices will remain under pressure from the duality of sluggish demand and more volumes flowing into the market as exports are falling. Our assessment is that local steel mills have been exporting an average of 800,000 mt of HRC every month since March. In August, this was down to around 400,000-500,000 mt and the trend will continue up to October-November, leading to more material in the local market. More aggressive discounting to push sales is a distinct possibility,” a steel sector analyst with a Mumbai-based financial services firm said.
$1= INR 73.00
