The downtrend in the local Indian hot rolled coil market has accelerated with traded prices sliding amid a combination of expected base price reductions by mills, emerging signs of a third wave of the pandemic and the imposition of fresh restrictions, and the worsening of growth in core sectors already reported at a nine-month low in November, SteelOrbis learned from trade and industry circles on Monday, January 3.
Local HRC traded prices have declined by INR 1,100/mt ($15/mt) to INR 63,100/mt ($849/mt) ex-Mumbai, while the price was heard at INR 62,500/mt (841/mt) ex-warehouse in the southern regional market of Chennai, down from INR 63,500/mt ($849/mt) ex-warehouse a week ago.
According to trade circles, the market is expecting mills to reduce base prices by a range of INR 1,500-2,000/mt ($20-30/mt) for January deliveries in reaction to the slowdown in trading activities and rising inventory at producers.
“Large parts of the country are going into new restrictions and “partial lockdown” conditions, with signs of a third wave of the pandemic emerging. Eight major industries categorized as “core sectors” grew by 3.1 percent in November, on month-on-month basis, according to government data released, the slowest in eight months. Fresh restrictions to check the next wave of the pandemic will only delay any recovery. Hence, all buyers are restricting themselves to need-based new bookings, resulting in an all-round rise in inventories,” a steel sector analyst with a Mumbai-based financial service advisory firm said.
“Indian overseas sales of HRC are also at a new low, putting incremental pressures on inventory and mills will be forced to adjust base prices in reaction,” he added.
However, at least two market intermediaries pointed out the divergence between long and flat product markets with the former inching up while the latter continued its extended decline, making short-term trend forecasting “extremely challenging”.
$1 = INR 74.30
