Local Indian hot rolled coil (HRC) prices have remained stable at higher levels during the past week at INR 39,050/mt ($528/mt) ex-works, but producers have been faced with a slowdown in stock movements. Several large integrated steel mills have been reported to be offering volume discounts averaging at INR 750/mt ($10/mt) to avoid a year-end inventory build-up.
According to market sources, most large steel mills have been forced to push volumes in the market in the face of a slowdown in fresh bookings by end-users and to reduce the risk of an inventory build-up as the current fiscal year draws to a close this month and to improve their cash liquidity positions.
The lack of export shipments over the past few weeks have also put additional pressures on local steel mills to attempt destocking at a discount, which followed the base price increase effected earlier this month, the sources said.
“Domestic steel mills will continue to face pressures on prices as local steel demand growth forecast was revised downwards from 6.5 percent earlier to 4-5 percent for the fiscal year 2020-21, according to the authorities. At the same time, finished steel prices are softening, following the spread of the coronavirus, but steelmaking input costs are rising, and the cost push on prices can only lead to fresh inventory build-ups at the steel mill end,” a steel sector analyst at a Mumbai-based financial services firm said.
“If the virus scare was not there, we would have kept pushing up prices every month. In March we also increased prices but buyers are pushing back. Let’s see,” T V Narendra, CEO of Tata Steel said.
According to a manager at an eastern India-based steel mills, a large number of domestic steel producers are import-dependent on sourcing of critical inputs like electrodes, refractories and manganese from China and are having to find higher-price alternative sources and this too is adding up to costs at a time when steel mills’ plans of a sustained price increase have been reversed.
$1 = INR 74.00
