Local Indian hot rolled coil (HRC) prices have showed slight signs of a recovery during the past week and, while base prices have remained stable at INR 37,800/mt ($496/mt) ex-works, the widespread discounting seen in earlier weeks has been withdrawn with a modest revival in fresh bookings from integrated steel mills, SteelOrbis has learned on Monday, June 22.
Signs of higher trading activity in the market and the withdrawal of discounting was opportune as integrated steel mills have been progressively increasing steel mill capacity utilizations, with the market estimating that most producers will reach 80-90 percent mill utilization by the end of the current month.
Markets sources said that the resumption of industrial activity has gained momentum in regional markets and that HRC prices in northern regions have bounced back to INR 37,800/mt ($496/mt) ex-works from trades concluded in the previous week at the discounted price of around INR 37,300/mt ($490/mt) ex-works.
HRC prices have also hardened in the western regional market to INR 37,500/mt ($492/mt) ex-works as discounts offers were reduced compared to the higher-discounted price of INR 36,900/mt ($484/mt) ex-works in the previous week, the sources said.
“The withdrawal of discounts is a positive. But I do not think that the market will enable integrated steel mills to increase base prices immediately. Labor, liquidity and logistics continue to offer challenges to industrial activity. Under these circumstances, we can expect prices not to fall, but with a very limited upside potential too,” an official at a steel mill said.
“Domestic demand will remain weak until the end of the second quarter. But pushing domestic sales through discounting is ending, enabling producers to improve margins. Of course, the higher export push will need to be maintained as steel mills go ahead in increasing capacity utilization as the domestic market will not support the higher volumes available,” he added.
$1 = INR 76.20