Local Indian HRC prices stable ahead of price revision by domestic steel mills

Local Indian hot rolled coil (HRC) prices have remained stable during the past week at around INR 40,800/mt ($679/mt) ex-works, with the market anticipating an upward revision of base prices by steel mills shortly this month, traders said on Tuesday, July 1.
 
Two Mumbai-based traders have confirmed that the market is expecting steel mills to increase prices by INR 500-1,000/mt ($8-16/mt) to absorb the 6.5 percent freight charge increase announced by Indian Railways last month.
 
While most large domestic steel mills have declined to comment on the hike in HRC prices on grounds that the size of the increase has not been finalized, an official at Rashtriya Ispat Nigam Limited (RINL) has confirmed that the increase in flat product prices has been decided and is to be announced shortly.
 
 
While a lot of effort has always made to absorb rising costs of raw material to the maximum extent, no producer is in a position to absorb the rise in freight charges, the RINL official said.
However, there are differences in the market's ability to absorb higher HRC prices.
 
According to a senior official with a steel mill with operations in eastern India, price adjustments against higher freight charges will not be resisted by the market since HRC inventories at distributors are not at high levels and traders will need to restock.
 
At the same time, with the Indian currency weakening to INR 60.19 to a dollar on Monday, June 30, traders have been rejecting ex-China HRC import offers during the past week, easing threats of import competition for domestic steel mills, the official said.
 
However, one Kolkata-based trader and another trader based in Mumbai said that the fall in transaction volumes was a clear indication of resistance to higher prices and that current demand levels would not support a price adjustment.