Local Indian hot rolled coil (HRC) prices have remained stable during the past week at INR 36,750/mt ($512/mt) ex-works amid sparse trading activity, traders said on Monday, August 26.
“The stability in the market is elusive. All key drivers like demand from user industries and inventory positions are all negative. This has been compounded by the fact that market intermediaries have large working capital locked up in unsold inventories and are facing pressures from lending financial institutions and large repayment liabilities, preventing them for making any fresh bookings even at lower prices,” a Mumbai-based trader said.
“Under the circumstances, it is only natural that a large number of western India-based traders have widened discounts to around INR 750/mt ($10/mt) to liquidate stocks and improve cash flows and meet debt repayment liabilities,” the trader added.
Market sources said that local steel mills are facing rising inventories because end users have been looking at traders even for small volumes as the latter are offering discounts unlike steel mill supplies which have only been offered at strict base prices.
Traders said that fresh bookings have fallen also due to end-of-month considerations and that rising mill-end inventories could force local steel mills to lower base prices for September deliveries, which will be announced later next week.
$1 = INR 72.02