Local Indian hot rolled coil (HRC) traded prices have declined further amid reports of inventory build-ups at the suppliers’ side and end-users deferring bookings as a demand uptick is unlikely in the near term, SteelOrbis learned from trade and industry circles on Monday, September 13.
There is a lot of talk of primary producers even adjusting base prices to pass on the benefits of lower iron ore prices to trigger demand at a time when distributors are largely staying away from fresh bookings even with the discounts on base prices offered by mills.
The sources said that traded prices have softened by up to INR 800/mt ($11/mt) on average across regional markets. Traded prices are at around INR 65,200- 66,200/mt ($887-901/mt) ex-Mumbai, versus INR 66,000-66,500/mt last week. The ex-Chennai price in the south has been heard at around INR 64,200/mt ($873/mt), the sources said.
Primary mills have kept base prices unchanged at INR 67,000/mt ($912/mt) ex-works and above, but discounts ranging at INR 1,000-2,000/mt ($14-28/mt) are said to be the norm for most producers in view of the general reluctance of distributors and dealers to place bookings.
“Even after several rounds of price increases by producers since January, discounts are gaining ground since early this month, indicating that a correction is setting into the market. Buyers are deferring bookings to wait and see if steel mills adjust prices factoring in the recent fall in prices of iron ore,” a steel sector analyst with a Mumbai-based financial services firm said.
“The traditional post-monsoon season demand uptick will be missed this year. Manufacturing growth is very sluggish. Hence, with end-users and distributors unwilling to restock finished flat products and mills facing inventory pile-ups, the latter are focusing on increasing overseas shipments of semis to limit the costs of inventory management,” he added.
$1 = INR 73.50