Local Indian hot rolled coil (HRC) tradable prices have slumped during the past week as trading activity has been severely hit by the pandemic which has assumed disaster proportions, and by business activity coming to a near halt in key industrial regions in the country, SteelOrbis learned from trade and industry circles on Monday, April 26.
Sources said that HRC tradable prices have fallen to levels of INR 58,000-60,000/mt ($773-800/mt) ex-Mumbai, on a par with base prices of integrated steel mills, down from traded prices in the range of INR 59,000-62,000/mt ($787-827/mt) a week ago.
The sources said that prices would have suffered greater setbacks but for apprehensions that outputs of steel mills risk falling in the short term as the government has announced a complete ban on the use of oxygen by all industries, and will divert entire available oxygen production capacities for medical purposes and the treatment of Covid-19 patients.
Citing examples, the sources said that Punjab state government has ordered the closure of all iron and steel units in the region to ensure that higher volumes of oxygen are diverted to hospitals.
While all integrated steel plants with captive oxygen plants are diverting supplies, steel output is at risk though no definitive assessment is yet available on the exact impact on production of the higher diversion of oxygen as directed by the federal ministry of home affairs, the sources said.
However, even though trading activity is at a very low ebb, fears on the supply side have prevented tradable prices from seeking even lower levels, the sources added.
According to two leading Mumbai-based steel distributors, the market is also currently discounting an immediate possibility of integrated steel mills hiking base prices in April as planned earlier, in the wake of India emerging at the worst pandemic-affected country in the world since early this month.
Any base price hike amid the current nationwide emergency health situation would be, both economically and politically, extremely sensitive, both traders averred.
“The upswing in the steel industry and aggregate demand will definitely be impacted negatively by the second pandemic wave. The Reserve Bank of India (RBI) has already cautioned on GDP growth being affected in the quarters ahead. Key user industries are either cutting back production or stopping plant operations in worst-hit regions. Steel prices face significant downside risks from current levels,” a steel sector analyst with a Mumbai-based financial advisory firm said.
$1 = INR 75.00