Even as local Indian base hot rolled coil (HRC) prices maintained, trading activity turned sluggish as the market poised to enter into an oversupply situation and buyers retreating, anticipating an August price correction by sellers, SteelOrbis learned from trade and industry circles on Monday, July 26.
Sources said that base HRC prices of integrated steel mills remained unchanged at INR 67,500-68,500/mt ($907-921/mt) ex-works, while traded price in markets like Mumbai was even lower in rare deals.
A section of traders and a Mumbai based analyst with a financial services firm pointed out that ex-India HRC export prices had corrected by around $70/mt during the first quarter of current year and hence export allocations in the second quarter of integrated steel mills will be lower increasing supplies in the local market and increase the pressure on prices.
Traders do not rule out the possibility of mills going in for a price correction of around INR 2,000-3,000/mt ($27-40/mt) in August to keep pushing higher volumes in the local market to check impact of lower export volumes and oversupply in the local market.
However, producers maintained that price outlook will be determined by costs. “Prices will follow costs. There has been 18 percent growth in steel production globally over last year and prices have gone up despite higher supplies indicating demand will remain strong,” a senior official from JSW Steel Limited said.
“There will be cost push on account of raw materials. Coking coal prices will go up $32/mt in current quarter translating to $20/mt cost push. There will be cost push from iron ore too. These will determine the price trend,” he added.
“Of course producers will aim to increase price realizations from quarter to quarter. But at the same time, producers might be forced to adjust prices on monthly basis owing to market resistance to price increases. More so since export volume shipment will be limited, at least in the current quarter,” the steel sector analyst with Mumbai financial advisory firm said.
$1= INR 74.40