Local Indian hot rolled coil (HRC) prices have come under fresh pressure during the past week, with prices falling by INR 500/mt ($7/mt) to INR 34,250/mt ($481/mt) ex-works touching a new three-year low amid fears that, despite production cuts being progressively implemented by several large steel mills, this has failed to check inventory increases, while buyers have been postponing fresh bookings, SteelOrbis has learned.
According to the traders, most large steel mills are attempting to keep pushing volumes into the market increasing discounts to the range of 15-20 percent, but this has failed as there has been no significant uptick in trading volumes during the past week.
“The market is in a typical bearish cycle. Steel mills are facing mounting inventories, demand is falling, and even small-volume buyers among end-users are deferring fresh bookings as prices can only fall further in the coming days, and hence they are in no hurry to conclude transactions now,” a Mumbai-based trader said.
“The depth of the market depression can be gauged from the fact that for 19 consecutive weeks local HRC prices have not marked any gains in prices. In fact, since April 2019, local HRC prices are down 17 percent. Local steel mills are only able to maintain sales volumes at low levels through discounts and producers have no pricing power,” the trader added.
In fact, according to a senior official at JSW Steel, most steel producers are not making any positive returns from their sales and are only maintaining sales at negative margins to ensure revenue flows.
$1 = INR 71.21
