After touching a historical peak previously, the local Indian hot rolled coil (HRC) market has started losing momentum, with prices moving down amid a fall in trade and end-users resorting to cautious raw material inventory management amid ‘tired sentiments over rising prices’ and the festival holidays ahead, SteelOrbis learned from trade and industry circles on Monday, November 1.
Sources said that local HRC traded prices are down INR 900/mt ($12/mt) to levels of INR 72,100-73,100/mt ($963-976/mt) ex-Mumbai, while a stray deal ex-Chennai in the south was heard even as low as INR 71,000/mt ($948/mt).
“A price correction after a historical peak is along expected lines. Low business activity ahead of the festival holidays is exaggerating the fall. But cost inflation and a recovery in the demand of end-use industries will enable prices to bounce back,” a steel sector analyst with a Mumbai-based financial advisory firm said.
“Despite the weakening of the market over the past week, the possibility of producers increasing base prices in November from cost increases still remains. We feel that mills will slightly defer price revisions after the festivals to around November 4,” he added.
However, at least two market participants said that at least a few steel mills will start experimenting in November with a new pricing mechanism instead of an across-the-board hike in base prices. The mills could put into play a flexible ‘surcharge’ over base prices linked to energy costs, at least for pricing in long-term supply contracts.
$1= INR 74.90
