The prolonged downward trend in the local Indian hot rolled coil (HRC) market has stabilized during the past week, with prices remaining at INR 37,250/mt ($535/mt) ex-works, as market intermediaries have been taking a pause ahead of new pricing announcements from domestic steel mills, traders said on Monday, August 5.
“Market activity is sharply reduced amid expectations that local steel mills might lower base prices for August deliveries. Even though local HRC prices have remained stable, there are still significant downside risks given overall sluggish manufacturing sector growth,” a Mumbai-based trader said citing the latest government data showing core sector growth at 0.2 percent in July this year, down from 7.8 percent in June.
“Overall sentiment is very negative. End-users are resorting to imports even for their low-volume restockings and expectations are that, even if local steel mills adjust August pricing, it will at best be nominal,” the trader added.
Other sources attributed the price stability to higher exports. Domestic steel mills are pushing higher volumes overseas to check inventories but market participants have expressed doubts whether such shipments can be sustained over the medium term and impact the large inventory built up already.
Sources at two large private steel producers said that they are carrying stocks equivalent to 45 days of production compared to 15 days of production previously and this build-up will put fresh pressures on prices unless exports can be sustained over a longer period.