Local Indian HRC prices lose ground amid stock liquidation

Against a backdrop of disappointment in the market with local steel mills not adjusting prices during the current month, local Indian hot rolled coil (HRC) prices have declined by INR 500/mt ($8/mt) during the past week to around INR 34,000/mt ($548/mt) ex-works amid hectic stock liquidation, traders said on Monday, April 20.
 
A Mumbai-based trader said that the market has long been awaiting price adjustments by local steel mills in view of large stocks held by intermediaries and the slowdown in demand, but, with such expectations failing to materialize, most dealers have been busy liquidating high-priced stocks during the past week.
 
"Several large steel mills like Tata Steel and Steel Authority of India Limited (SAIL) have maintained that their margins are already under pressure from higher input costs and this can be interpreted as an excuse not to adjust base HRC prices," he said.
 
"Steel mills with captive iron ore mines have stated that the new mandatory contribution to the District Mineral Fund has increased their cost of mining and so end-product margins could not be squeezed further," he added.
 
Market sources said that most traders have decided to drastically reduce inventories to cut costs and are liquidating existing stocks to improve cash position and minimize fresh bookings.
 
The sources said that the ongoing fall in offers for ex-China HRC has accentuated the shift of interest to imported flat steel products and traders' propensity to reduce stocks of local HRC and meet demand for even small volumes through imports.
 
Ex-China imported HRC offers have moved down by another $10/mt week on week to below the $400/mt mark. Sources said that a number of transactions for small volumes have been reported in the range of $395-400/mt CFR Mumbai, putting further pressure on local HRC prices.