Local Indian hot rolled coil (HRC) trade prices have continued to lose ground on combined pressure from rising inventory in trade channels, industrial users resorting to only need-based purchases, and discounted sales by mills, SteelOrbis learned from trade and industry circles on Monday, 23 June.
Sources said that HRC trade prices are down INR 500/mt ($6/mt) to INR 50,600/mt ($583/mt) ex-Mumbai and lost INR 200/mt ($2/mt) at INR 52,500/mt ($605/mt) ex-Chennai in the south.
According to the sources, while large mills have officially maintained base prices for June, at least two Tier I mills were heard to be confirming bookings at discounts ranging up to INR 1,000/mt ($12/mt), indicating pressures from inventories.
With the first quarter of the fiscal year ending on 30 June, mills have been focusing on liquidating stocks and garnering cash on the books prior to finalizing accounts for the April-June period.
At the same time, trade channels are being forced to offer extended credit terms to be able to convert enquiries to sales, thereby aggravating cash flows and the liquidity situation of small and medium-scale distributors, sources said.
“The mood is getting more and more bearish on a combination of weak demand and supply-side pressures of mounting inventories. The monsoon rains have spread across the country and depressed demand is more widespread now,” a Mumbai-based distributor said.
“The second quarter (July-August) will also see a weak market trend and prices face a further downside risk,” he added.
$1 = INR 86.71