Indian local hot rolled coil (HRC) prices have been maintained unchanged during the past week, but trading activity in the market has continued to take a hit amid the rising tussle between buyers and sellers with the former anticipating prices will find a new bottom, while integrated steel mills are expecting to ride out pressures from market conditions, SteelOrbis has learned from trade and industry circles on Monday, February 15.
The trade and industry circles said that, with the regulatory authority launching anti-price fixing allegations against producers, re-rolling mills increasing their bookings of ex-China HRC will keep integrated steel mills under pressure to lower local base prices, while some producers have maintained current local prices unchanged as a reflection of expected positive demand movements and still high input costs.
“Our assessment of high-frequency demand and consumption does not show much downside risks to local steel prices. In January 2021, domestic steel consumption increased nine percent on year-on-year basis. Inventories with steel mills in January 2021 are also about on average 15-20 percent lower than the corresponding period of the previous year. These do not indicate any sharp fall in prices,” an official at a western India-based integrated steel mill said.
However, according to rating and financial firm ICRA, Indian HRC prices have a downside risk of at least 10 percent from current levels amid the reduction in customs duty, the rebound in import bookings by intermediate HRC consumers and the softening of input costs, particularly after local iron ore miner NMDC reduced local sales prices after five consecutive rounds of hikes since November 2020.
Sources said that local Indian integrated steel mills have maintained base prices in the range of INR 53,500-55,000/mt ($733-753/mt) ex-works, but it has been pointed out that premiums have vanished from the market and most new bookings are at the lower end of the price range for higher volumes, indicating that producers are facing pressures from the market.
$1 = INR 73.00
