Local Indian hot rolled coil (HRC) have continued to decline slightly over the past week, indicating a deepening market correction amid buyers’ resistance to the recent spate of base price hikes by mills and a fall in trade volumes, SteelOrbis learned from trade and industry circles on Monday, April 20.
Sources said that trade-level HRC prices are down INR 200/mt ($2/mt) to INR 56,600/mt ($611/mt) ex-Mumbai and have lost INR 300/mt ($3/mt) to INR 59,200/mt ($639/mt) ex-Chennai in the south.
According to the sources, with a commensurate improvement in the industrial demand profile, the sustained upward base price revisions by mills have prompted buyers to resort to minimal ‘need-based’ restocking.
“Inflationary pressures are brewing across economic segments based on rising energy costs. This is increasing the production costs of mills while dampening aggregate demand. These twin elements risk further stagflation and a bearish outlook,” a steel sector analyst with a Mumbai-based financial advisory firm told SteelOrbis.
“In our assessment, prices can go up by another INR 3,000/mt ($32/mt) in the short term, especially for small and medium mills dependent on natural gas as primary energy. Geopolitical tensions in the Middle East will prolong the energy crisis. Availability of scrap and coking coal is erratic and impacts production costs. The question is how much of the price hike the market can absorb,” he added.
