The local Indian hot rolled coil (HRC) market has resumed its downward trend during the past week hitting a two-year low, moving down by INR 750/mt week on week to INR 38,750/mt ($562/mt) ex-works, in reaction to sustained import competition, sluggish demand from end-users and an inventory pile-up at steel mills, traders said on Monday, July 22.
“The relative stability seen in the previous week has proved short-lived in the absence of any support from demand. Fresh bookings from actual users have continued to fall and the medium-term outlook is extremely negative,” a Mumbai-based trader said.
“Reports indicate that there has been sharp rise in inventories at steel mills and the latter have been turning their focus towards overseas shipments to check stock-carrying costs. Market intermediaries are also in no mood to make fresh bookings in view of the severe slowdown in existing stock movements. Despite this, local steel mills are not expected to adjust base prices next month and most are expected to roll over current prices for next month deliveries too,” the trader added.
At least two market sources have confirmed that a few western region-based traders have commenced discount offers ranging around INR 500/mt to liquidate inventories and manage cash flows, adding that discounting could be expected to widen across other regional markets as every market intermediary is carrying large inventories.
$1 = INR 68.92