Local Indian hot rolled coil (HRC) base and traded prices have remained at higher levels in the past week although some stray reports of discounted sales have been reported, but most market participants ruled out the possibility of this snowballing into a trend, SteelOrbis learned from trade and industry circles on Monday, June 21.
The base prices have been maintained at INR 69,000-70,000/mt ($932-946/mt) ex-works and speculation has continued over possible base price hikes by producers in the coming week expected in the range of around INR 3,000/mt ($40/mt).
Accordingly, traded prices have been maintained at higher levels of INR 72,000-73,000/mt ($973-986/mt) ex-Mumbai. However, several traders said that at least two eastern India-based producers were reported to be offering discounts of around INR 2,000/mt ($27/mt), but this was attributed to “short-term inventory management” and most participants ruled out such stray discounted deals emerging as a trend.
“Domestic steel consumption during May continued to decline on month-on-month basis. The demand revival in response to the phased lifting of lockdown restrictions has been below expectations over the past fortnight,” a steel sector analyst with a Mumbai-based financial services firm said.
“However, the impact of this on prices will be limited by local HRC prices still at a 10-15 percent discount to the landed price of imports. A rally in international prices will offer a fresh window for local mills to increase base prices. The strong export thrust will also offset weak domestic demand,” he said.
According to the analyst, the share of exports in total finished steel production in May was 15 percent, rising from 11 percent in April, indicating that local steel mills will continue to strategically use overseas shipments to counter weak domestic demand and hence downside risks to prices will be limited.
$1 = INR 74.00
