Local Indian hot rolled coil (HRC) prices have continued on an upward trend for the fifth consecutive week amid a combination of expectations of hikes in base prices by domestic steel mills, tightening of supplies in the market, and import competition failing to make a mark, traders said on Monday, August 3.
Market sources said that local HRC prices have gained INR500/mt ($7/mt) week on week to INR 40,300-40,500/mt ($538-541/mt) ex-works amid expectations that domestic steel mills will continue to nudge up base prices for August deliveries while announcing new prices over the next 7-10 days.
Domestic steel mills are expected to take advantage of import offers failing to find acceptance in the local market among end-users in order to increase their base prices.
Producers are expecting that higher domestic prices will be absorbed in the market which is also seeing a slight tightening of supplies as integrated steel mills are aggressively booking higher export volumes.
Even though domestic demand has remained weak, higher export volumes are creating tight supply for certain end-use segments, traders said.
Several traders pointed out import competition failing to make a mark among end-users and trading importers would offer local producers headroom to increase prices. Citing examples, the traders said that the landed price of ex-South Korean HRC is estimated in the range of $505-510/mt CFR Mumbai, which has not found acceptance among end-use buyers who have continued to source local material.
“Fears of oversupply post-pandemic are proving to be misplaced, at least since last month as the revival of the steel industry is increasing its pace. In fact, there has been a sharp drawdown in inventories across steel mills and ,coupled with higher dispatches overseas, the local market is seeing some tightness in supplies, which is supporting higher local HRC prices,” an official at a steel mill told SteelOrbis.
$1 = INR 74.90