Over the past week, prices in the local Indian hot rolled coil (HRC) market have continued to decrease for the second consecutive week, decreasing by INR 400/mt to INR 40,800/mt ($587/mt) ex-works, in reaction to import pressures and uncertainties of domestic steel mills’ pricing for the current month, traders said on Monday, June 3.
“It’s a worrying signal that local HRC prices are continuing to seek lower levels even on steadily falling trading volumes,” a Mumbai based trader said.
“End users are resorting to imports even for their low volume requirements indicating that domestic prices are not aligned to softening international prices. Domestic steel mills have to take a big call on base price strategy for June. While the steel mills have to cope with rising price of raw material but at the same time cannot ignore rising imports and slowdown in domestic HRC sales. The market is keeping a close watch of which way steel mills react to current market dynamics,” he added.
According to a steel sector analyst with a Mumbai based financial advisory firm, the fundamental problem in the market is demand fall and rising import of small volume contracts is just aggravating the bearish sentiment.
In the short and medium term, any revival in trading condition will depend on whether the government intervenes with external fiscal stimulus for the manufacturing sector but opinions on such a possibility is also sharply divided given the government’s tight fiscal position, the analyst said.
$1 = INR 69.50