Prices in the local Indian hot rolled coil (HRC) market have surged ahead during the past week, increasing by INR 1,000/mt to INR 46,500/mt ($643/mt) ex-works, as most domestic steel mills announced higher base prices for current month deliveries and amid optimism over overseas shipments, traders said on Monday, September 10.
Market sources said that most local steel mills revised base prices increasing them by a range of INR 1,000-1,200/mt, citing the rise in input costs, particularly imported coking coal, in the wake of the sharp depreciation of the Indian currency against the US dollar.
The sources said that this was supported by a revival of HRC exports with a contract for an estimated 20,000 metric tons concluded for shipment to Vietnam and contracts for HRC shipments to Nepal under negotiations.
“The revival of ex-India HRC shipments will enable Indian steel mills to reduce their inventories and offset the impact of the domestic price increase. But I do not think that trading volumes in the local market which have remained low over the past few months will improve as end-users' ability to restock aggressively is very limited given the overall slowdown in the manufacturing growth index,” a Mumbai-based trader said.
“Most of the large private sector and government-run steel mills are operating at maximum capacity utilization and this will only lead to excess material available in the market. I would keep a close watch on any signs of market resistance and of possible corrections, before booking any new significant volumes at current price levels,” the trader added.
$1 = INR 72.33