Local Indian hot rolled coil (HRC) trade prices have continued to seek lower levels following the onset of the monsoon season in some regions, indicating upcoming lean months for manufacturing, and with buyers unwilling to commit fresh bookings without extended credit terms, SteelOrbis learned from trade and industry circles on Monday, May 26.
Sources said that HRC trade prices are down INR 500/mt ($6/mt) to INR 52,000/mt ($611/mt) ex-Mumbai and have lost INR 500/mt ($6/mt) to INR 53,000/mt ($623/mt) ex-Chennai in the south. At the same time, several sources have reported even lower prices for HRC ex-Mumbai at INR 51,500/mt ($605/mt).
The early onset of monsoon weather in the southern and western regions has prompted the manufacturing sector to adjust its raw material restocking in anticipation of the lean demand season ahead. According to market insiders, at the same time trade circles have continued to show resistance to higher prices, declining to confirm bookings unless producers offer extended credit periods beyond 30 days.
“Demand in the industrial sector has started to decline. Buyers are also resisting higher prices. As a result of this slowdown in movement of stocks, trade is not restocking unless mills offer extended credit terms that partially offset inventory-carrying costs at distribution level,” a Mumbai-based trader said.
“We expect HRC prices to move within a narrow range with a negative bias for the next two to three months. Of course, market dynamics can change if mills take a call on increasing base prices in June, which can prove to be counter-productive in falling market conditions,” he added.
$1 = INR 85.07