Local Indian hot rolled coil (HRC) trade prices have continued to fall for the sixth consecutive week, widening the gap with mills’ base prices, even after reductions largely owing to need-based bookings by end-use industries, and dealers refraining from restocking expecting further base price cuts by producers in the current month, SteelOrbis learned from trade and industry circles on Monday, May 16.
Indian HRC trade prices have inched down INR 500/mt ($6/m) to INR 72,000/mt ($930/mt) ex-Mumbai and are down INR 300/mt ($4/mt) to INR 71,300/mt ($920/mt) ex-Chennai in the south. The fall over the past week has widened the gap with mills’ base prices, which were lowered over the past week to a range of INR 74,000-76,000/mt ($956-981/mt) ex-works.
“Trading activity is suffering from the double blow of low domestic demand and falling overseas sales both in terms of volumes and price realizations. Recent cuts in base prices by mills have failed to trigger any improvements, largely because industrial users are unwilling to carry large raw material inventories in the face of the overall slowdown and inflationary pressures,” a Mumbai-based steel distributor said.
“This, along with the fact that mills are reporting a rise in inventory, leading to market anticipation of another base price reduction of at least INR 1,000/mt ($12/mt) in May, means that dealers too are in no hurry to restock. Bank lending rates too are rising as India’s central bank starts its delayed action in tackling inflation. Hence, higher borrowing costs of working capital are keeping market intermediaries from action,” he said.
At least two other traders have pointed out that the monsoon season is about to set in shortly and, amid the traditional months of low manufacturing and construction activities, the demand revival could be well discounted and prices at best can be expected to move in a narrow range with a negative bias.
$1 = INR 77.44
