Local Indian hot rolled coil (HRC) prices have remained on a sharp uptrend over the past week, amid sustained restocking based on the anticipation of further base price hikes by mills, even though the outlook on the demand side is considered to be neutral by market participants, SteelOrbis learned from trade and industry circles on Monday, January 12.
Sources said that trade-level HRC prices are up INR 300/mt ($3/mt) to INR 49,000/mt ($543/mt) ex-Mumbai and have gained INR 1,000/mt ($11/mt) to INR 51,400/mt ($570/mt) ex-Chennai in the south. According to the sources, a moderate to high level of restocking has been reported by industrial users based on the anticipation of more base price hikes by producers even after three rounds of increases since December.
However, market participants said that higher trade volumes and price increases have been seen despite not much change being observed in the demand forecast during the last quarter of the current fiscal year, the sources added.
“Most of the recent uptrend could be attributed to supply-side factors, the long-term safeguard duty announced by the government and the resultant low import competition, and the lower-than-average inventories at mills. Consumers were restocking ahead of more price increases by mills to build lower-cost inventories,” a Mumbai-based distributor told SteelOrbis.
“Without support from the demand side, the sustainability of higher prices remains in doubt. A correction cannot be ruled out in the short term amid possible buyer resistance and the completion of the current round of restocking. Distributors remain cautious on building inventories,” he added.
$1 = INR 90.21