Local Indian hot rolled coil (HRC) prices have been under pressure in the past week, with the market getting increasingly fragmented from differential discounts on offer, resulting in wide variations in prices in regional markets.
According to market sources, official local HRC prices have edged down by INR 200/mt ($3/mt) week on week to INR 37,800/mt ($501/mt) ex-works amid continued declining demand restricted to only fresh small-volume bookings.
The varied range of discounts by producers has resulted in a fragmentation of the market, with benchmark prices no longer relevant and prices showing wide variations in regional markets.
For example, in northern Indian markets HRC prices have been ranging at around INR 37,500/mt ($497/mt) ex-works, net of discounts. But in major manufacturing and industrial regions in the west still impacted by the high number of cases of covid-19 and challenges of disrupted supply chains, prices have been much lower at INR 36,900/mt ($489/mt) ex-works. The price level is slightly above those offered a week ago, but still lower than prices in other regions.
Indian integrated steel mills are all ramping up production levels and most plants are currently operating at utilization rates in a range of 65-85 percent compared to lower than 30 percent during the past months of the lockdown. However, local HRC production and prices are more a function of export volumes sold by most steel producers rather than of domestic demand.
Most steel mills are aggressively pushing higher volumes overseas and even limited volumes of local sales are through deep discounting and are being offset by higher margin realizations from export sales, and this is the medium-term ‘new normal’ for producers, an official at Steel Authority of India Limited (SAIL) said. Even SAIL which has a small share of exports in its total sales and is mostly restricted to semis has been aggressively entering the exports markets for flat products like HRC, selling to China and Southeast Asia.
$1 = INR 75.50
