Local Indian hot rolled coil (HRC) prices have remained stable during the past week at around INR 34,000/mt ($532/mt) ex-works as local steel mills have decided to keep their base prices unchanged in anticipation of a demand uptick and protection from imports due to the weak Indian currency, traders said on Monday, May 11.
"Most steel mills have finally veered round to keeping base price unchanged. A few like Rashtriya Ispat Nigam Limited (RINL) and Steel Authority of India Limited (SAIL), however, are marginally reducing HRC offers on negotiated basis with their large customers," a Mumbai-based trader said.
"However, any across-the-board price adjustment is being ruled out by the market with the rupee poised to remain weak in the medium term and with the reduced threat of imports providing support for local HRC prices," he added.
Market sources said that domestic steel producers JSW Steel and Essar Steel are also reported to have kept prices unchanged for May-June although some discounts are offered on negotiated basis.
Some market sources have said that inquiries received by dealers have showed a marked improvement and that there is a tentative indication that international prices may have bottomed out, thereby offering some stability to local HRC prices.
Although on Monday, May 11, the rupee broke its losing trend to gain INR 0.13 against the US dollar to INR 63.84, market sources said that the medium-term outlook is still weak and the currency will remain weaker than the INR 63 to a dollar mark.
The weak rupee is already impacting imports, with the market reporting a sharp fall in import transactions for ex-China HRC during the past week, market sources said.
While the weak currency is making imports expensive, ex-China HRC offers have also moved up another $10/mt to the range of $410-420/mt CFR Mumbai but have found very few takers and this has offered much needed support for local prices, sources added.
$1 = INR 63.85