Over the past week, downward pressures have increased in the local Indian hot rolled coil (HRC) market with prices decreasing by INR 1,500/mt week on week to INR 44,500/mt ($623/mt) ex-works, amid concerns over rising inventories at steel mills rather than because of import competition, traders said on Monday, December 10.
“The sharp slump in the local HRC market is surprising considering a slight uptick in import offers. Going by market reports, the downtrend of local HRC prices is being largely fuelled by rising inventories at domestic steel mills as inward shipments of imports have showed signs of tapering off over the past week,” a Mumbai-based trader said.
“With local HRC prices losing around INR 2,200/mt over the past fortnight and along with rising inventories held by producers, the market is expecting another round of base price adjustments by domestic steel mills, the second revision in the current month,” the trader added.
A section of the market has attributed the negative sentiment and low activity in the market to a general sense of nervousness over national political development and its possible impact on the economy in the medium term.
These market participants said that the election results in four states to be announced on Tuesday would signal portents for the Indian national elections slated to be held within another few months and the setback to the current political dispensation in New Delhi would impact market sentiments and contribute to the general risk aversion being noticed among dealers and end-users.
According to two other traders, the sharp falls in HRC prices early in the month have triggered speculation that local steel mills could lower base price by a range of INR 500-1,000/mt before the year-end.
$1 = INR 71.39