Local Indian hot rolled coil (HRC) trade prices have lost further ground in reaction to the Indian government’s imposition of export duty, anticipations of supply-side pressures on prices, and reductions in base prices by producers, SteelOrbis learned from trade and industry circles on Monday, May 23.
Indian trade HRC trade prices have slipped to INR 69,300/mt ($894/mt) ex-Mumbai, down INR 2,700/mt ($34/mt), and down to INR 69,000/mt ($890/mt) ex-Chennai, a loss of 2,300/mt ($30/mt).
According to a steel sector analyst with a Mumbai-based financial advisory firm, the imposition of 15 percent export tax would threaten an estimated 18 million mt of steel exports from the country, of which 60-70 percent comprises of HRC, and this volume would enter the local market, putting supply-side pressures on prices.
Domestic demand remains sluggish and the local market is not in a position to absorb additional supplies and mills would therefore be forced to reduce base prices in the coming weeks to keep moving volumes from mills to the market.
A number of market participants expect producers to lower June base prices by INR 1,500-2,000/mt ($19-26/mt). They said that lower prices could spur consumption and demand but margins of mills would become strained as they would be left with higher volumes to sell in the local market at lower prices, following the drying up of overseas sales opportunities.
$1 = INR 77.50
