Local Indian hot rolled coil (HRC) trade-level prices have softened slightly over the past week despite recent base price hikes by mills, amid divergent market opinions on whether the slight losses are a precursor to an emerging correction or whether tightening supplies and higher input costs will offer support against the temporary decline.
Sources said that HRC trade prices are down INR 200/mt ($2/mt) to INR 56,800/mt ($610/mt) ex-Mumbai and have lost INR 400/mt ($4/mt) to INR 59,500/mt ($639/mt) ex-Chennai in the south.
However, market participants have expressed divergent short-term outlooks. A section of the market maintains that the fall in trade volumes, distributors lowering prices slightly to push sales, and the lack of a material change in the demand profile in user industries indicate that an imminent correction will set.
Another section of the market sources said that the marginal losses seen during the past week were “a temporary resistance to the base price hikes announced by mills last week”. This would be overcome by a tightening of supplies with at least two large mills planning maintenance shutdowns. At the same time, the market will have to reconcile to the rising input costs faced by producers and overall inflationary pressures across the economy.
“Rapid base price hikes have created a lot of concern among users. Industries are re-working their restocking strategies and are unwilling to carry very large higher-priced inventories, resulting in a slowdown in HRC stock movement,” a Mumbai-based distributor told SteelOrbis.
“But we are possibly firmly in a high-priced economy. Cost pressures driven by the shortage in energy supplies are expected to be sustained as the geopolitical tensions in the Middle East seem to be prolonged,” he added
$1 = INR 93.14
