According to a Mumbai-based trader, there has been a lot of talk in the market about domestic steel mills reducing prices at the end of February or in early March in order to fight imports.
However, reports have indicated that steel mills had deferred internal meetings on pricing until after the Indian federal budget on February 28, when it is thought the government will likely announce an increase in import duty to protect the domestic steel industry from cheaper imports, he said.
Market sources, however, have said that, even if the government does increase the import duty to 10 percent from 7.5 percent at present, local mills will still need to adjust prices by 10 percent to have any impact against HRC imported from China and Russia.
The sources said that the markets' nervousness increased on Monday when it was reported that major international brokerage houses had downgraded the ratings for Indian steelmakers Steel Authority of India Limited (SAIL) and JSW Steel since they will have to operate on much lower margins in the face of increased import competition.
Taking this as an indication of inevitable price adjustments by the steel mills within the next few weeks, buyers have retreated from the market, resulting in negligible transactions volumes, the sources added.
$1 = INR 62.18