Local Indian HRC prices stable despite cash liquidity crisis

Prices in the local Indian hot rolled coil (HRC) market have remained stable during the past week at INR 38,500/mt ($565/mt) ex-works, amid extremely low trading activity even as the market continues to reel from impact of the Indian government's demonetization of high value currency notes, traders said on Monday, November 21.
 
"There are too many uncertainties after the government banned high value currency notes as legal tender. Under these circumstances, no market participant is keen to make conclude fresh transactions," a Mumbai-based trader said.
 
"For example, various transport operators report that close to half of the total number of trucks that ply across the country have been stranded on highways as operators and drivers have run out of cash. Naturally steel dealers are staying away from making any bookings as they will face transportation problems," the trader added.
 
At least two other traders said that, while local HRC prices were stable as of now, prices were not expected to be sustained in the medium term, post-demonetization. These traders felt that, with over 86 percent of total currencies in circulation sucked out by the government, there will be severe liquidity problems and this in turn will depress demand for the product, putting renewed pressure on price levels.
 
Most market participants are busy settling their cash positions and bank accounts, rather than focusing on trading or making transactions, sources said.
 
$1 = INR 68.15