Local Indian hot rolled coil (HRC) prices have continued to consolidate at higher levels gaining INR 250/mt ($3.5/mt) week on week to INR 36,000/mt ($508/mt) ex-works amid improved trading activity and reports that local steel mills will continue to push up base prices over the next few months, SteelOrbis learned on Monday, December 16.
A large section of the market expects that local steel mills will follow up their base price revision with another price hike later this month, to keep increasing per ton margins over the next few months before the end of the fiscal year on March 31, 2020. At least two traders said that the market is expecting a base price increase in the range of INR 500-1,000/mt ($7-14/mt) before the end of December.
“Most of the large steel mills are expecting prices to recover in the last quarter of the current fiscal year. Steel mills are banking on the fact that worst of the market is over and prices can only recover from this point. Also, several large steel mills have lowered production levels during the October-December quarter and this is expected to bring a balance in demand-supply and offer support to attempts to push up prices,” a Mumbai-based trader said.
“But there are still a lot of uncertainties and negatives persisting. The downturn can be much more structural and deep-rooted than a section of the market is expecting. For example, data released during the past week showed that the Index of Industrial Production (IIP) in October 2019 was 3.8 percent, recording a third consecutive month of decline. Such structural macro negatives will limit upside potentials of prices in the medium term,” he added.
