Local Indian hot rolled coil (HRC) trade-level prices have remained stable over the past week amid the slow movement of stocks in the market, with producers facing rising inventories and dealers pulling back extended credit terms as they are faced with liquidity challenges, SteelOrbis learned from trade and industry circles on Monday, July 27.
Sources said that HRC trade prices are stable at INR 56,500/mt ($586/mt) ex-Mumbai and are unchanged at INR 57,800/mt ($599/mt) ex-Chennai in the south.
According to the sources, dealers had been attempting to push sales offering extended credit terms. But this was also being pulled back as being unsustainable, with distributors facing an acute liquidity crisis as working capital was being locked up in credit to customers. The absence of favourable credit terms prompted several buyers to stop bookings, further aggravating the movement of stocks across the supply chain.
Industrial users are also largely cautious in restocking raw materials, seeing their own sales growth moderating, and they have been mostly present in the market only to meet need-based requirements.
“There is no significant buying from large industrial users. Dealers are also not committing bookings, already being saddled with above average unsold stocks. Mills despite dropping prices have not seen any improvement in stock movements,” a Mumbai-based distributor said.
“The strong bearish phases cannot solely be attributed to the usual lean monsoon period. There is fundamental weakness in demand growth across sectors,” he added.
$1 = INR 96.39
