Local Indian hot rolled coil (HRC) prices have remained under pressure during the past week. Dealers have been concluding trades at the lower end of the current price range, while mills have continued to offer across-the-board discounts to ease pressures of mounting inventories, SteelOrbis learned from trade and industry circles.
Indian local trade prices are reported in the range of INR 65,200-66,200/mt ($887-901/mt) ex-Mumbai, with most trades being near the lower end of the range at INR 65,000/mt ($884/mt) across regional markets in the east and south.
Primary producers have also kept base prices unchanged at INR 67,000/mt ($912/mt) ex-works and slightly above, but all were reported to be offering discounts of around INR 2,000/mt ($27/mt), higher than discounts of INR 1,000/mt ($13/mt) a week ago, indicating rising pressures on prices from inventory buildups.
“Mills are facing a rise in HRC inventories as prices of cold rolled coil (CRC) are falling faster and narrowing the conversion spreads of HRC and reducing value-addition margins,” a steel sector analyst with a Mumbai-based financial services firm said.
“Mills are limiting volume allocation for converting HRC as conversion spreads with CRC have been reduced to an average of INR 7,000/mt ($95/mt) from the average of INR 10,000/mt ($136/mt) a month ago. Hence, mills faced with slow movement of HRC stocks are compelled to push for exports even amid lower realizations from overseas sales,” he added.
According to an official with Steel Authority of India Limited (SAIL), recent heavy rainfall across northern and eastern regions and floods in the western state of Gujarat coupled with fears of the next wave of the pandemic have been damping down any uptick of demand, resulting in the slow movement of stocks from mills to end-users.
Dealers too have reduced restocking, anticipating that mills could adjust base prices to pass on the benefits of the slump in local iron ore prices to stimulate demand.
$1 = INR 73.50