Local Indian local hot rolled coil (HRC) prices have decreased by INR 1,300/mt ($19/mt) during the past week to around INR 29,500/mt ($435/mt) ex-works, due to the sharp rise in inventories both at steel mills and dealers, traders said on Monday, February 1.
“A correction in HRC prices has been building up over the past two week. But the size of the price fall during the past week took most market participants by surprise,” a Mumbai-based trader said.
“Most market reports indicate that there has been a sharp rise in HRC inventories both at local steel mills and dealers, aggravating the price correction seen earlier,” he said.
“Dealers had been building up stocks in anticipation of the government’s imposition of a minimum import price. And as the latter does not seem to be an immediate possibility, the market is in shock,” he added.
Market sources said that the downward pressures could be expected to become worse since the loss in prices has occurred even though there has not been any pressure or competition from imports.
Ex-China HRC offers have been maintained in the range of $310-320/mt CFR Mumbai, but no significant transactions have been reported in the market during the week, the sources said.
Some traders said that, with local steel mills unlikely to make any price adjustment to base prices during the last two months of the current fiscal year, HRC prices have another INR 500/mt ($7/mt) downside risk, with prices consolidating at sub-INR 30,000/mt ($552/mt) levels.