A correction has been seen in the local Indian hot rolled coil (HRC) market with tradable prices seeking lower levels in reaction to the bearish export outlook and producers showing divergent base pricing for the current month, SteelOrbis learned from trade and industry circles on Monday, July 12.
The sources said that two leading integrated steel mills, JSW Steel Limited and ArcelorMittal Nippon Steel Limited (AMNS), have reported base price cuts in the range of INR 1,500-2,000/mt ($20-27/mt), while other mills did not officially announce any change in base prices, but are reported to be taking bookings at discounts to their unchanged base prices.
In view of this, HRC base prices of mills range between INR 67,500-68,500/mt ($904-918/mt) ex-works, while some suppliers have not changed base prices from INR 69,000/mt ($924/mt) ex-works on average, sources said.
An official at AMNS stated, “The price correction is temporary considering the immediate market conditions. The correction is small and the situation can quickly reverse even before the end of the current month.”
However, a number of market participants said that, apart from weak demand, the rise in local supplies is creating pressures on prices. It has been pointed out that the export market outlook is bearish particularly in the lucrative EU region.
Sources said that the tariff quota for ex-India HRC was exhausted on the very first day of July and any further shipments would attract the higher import duty of 25 percent, which would temper buyers’ interest. The resultant lowering of export allocations by Indian steel mills in the current quarter would entail higher volumes diverted for local sales, increasing pricing pressure.
“Indian mills are attempting to offset weak domestic demand by pushing higher volumes overseas as they had been doing over the past few months,” a steel sector analyst with a Mumbai-based financial services firm said.
$1 = INR 74.64