After moving upwards for three consecutive weeks, local Indian local hot rolled coil (HRC) prices have come under downward pressure during the past week, decreasing by INR 800/mt ($12/mt) week on week to the range of around INR 31,100/mt ($460/mt) ex-works, amid a stock buildup at dealers and a slowdown in bookings by consumers, traders said on Monday, January 18.
"The gains over three consecutive weeks were too good to last, considering that demand was sluggish and dealers were getting saddled with stocks," a Mumbai-based trader said.
"HRC price levels had edged up largely on the back of the pricing power of local steel mills supported by the halt in imports. However, such a pricing strategy has its limits and a correction was inevitable when demand continued to fall and with dealers facing carrying costs for high-priced HRC," he added.
Market sources said that local prices have come under pressures as the market is veering round to the fact that the government will not go through with imposing a minimum import price (MIP) and import protection for local prices will ultimately ease in the medium term.
A section of market sources has not ruled out the possibility of a correction gaining momentum later in the week, with some traders even talking of local prices moving down another INR 1,000/mt ($15/mt) as several dealers have been considering reviving aggressive discounting to clear high-priced HR stocks.
$1 = INR 67.67