Although local Indian hot rolled coil (HRC) prices had been expected to increase by INR 500-700/mt ($7-10/mt) for December delivery, they have remained stable during the past week at INR 34,750/mt ($485/mt) ex-works as the outlook has worsened in view of rising negative macroeconomic indicators, SteelOrbis learned on Monday December 2.
Last week, the government announced a gross domestic product (GDP) growth for the July-September quarter this year of 4.5 percent, the worst quarterly performance of the economy in the last six years. The sharpness of the decline in the economy can be gauged from the fact that it grew eight percent during the corresponding quarter of the previous year.
The deep-rooted downturn of the economy comes on the back of the Index of Industrial Production (IIP), a measure of factory output, declining for the second consecutive month in September by 4.3 percent, to the lowest of the last eight years.
“The HRC price stability seen over the past fortnight is elusive. Neither producers nor consumers can ignore the deep depression in the economy and the sectoral demand depression. Steel producers which were possibly considering a modest hike in base price seeing stability over the past two weeks will have to take into consideration new macro-data and either maintain base prices or even adjust them lower,” a Mumbai-based trader said.
“Current local market conditions indicate that most large domestic steel mills will have to renew their export thrust to keep pushing volumes into the market and check inventory-carrying costs,” he added.
$1 = INR 71.60