Local Indian hot rolled coil (HRC) trade prices have been stable, with the downtrend checked by support from need-based restocking by trade channels and some mills going in for maintenance shutdowns, limiting supply-side pressures on the market, SteelOrbis learned from trade and industry circles on Monday, July 18.
Indian HRC trade prices have been maintained at INR 59,600/mt ($746/mt) ex-Mumbai and stable at INR 60,500/mt ($757/mt) ex-Chennai in the south.
Trade and officials at mills said that sentiments are seen to be improving as low-volume bookings have been sustained on the perception that prices might have bottomed out and producers for their part are being reconciled to lowering output levels to seek a balance with new demand scenarios.
“It is not that there has been any improvement in demand. Market participants just feel that the worst may be over and that we are in for a prolonged period of sustained buying at lower levels,” an official at a government mill said.
“Also, trade channels which had almost reduced new exposures to negligible levels are needing to come back and replenish stocks, which is offering some support to trade prices,” he said.
However, a steel sector analyst with a Mumbai-based financial services provider cautioned that a new threat to prices has been opened up by the Reserve Bank of India’s (RBI) new mechanism of international trade settlement in rupees to promote trade with countries hit by western sanctions like Russia.
The analyst said that, though these are early days, reports available in the market indicate ex-Russia offers for HRC have started coming at an average 10-15 percent discount to local prices and the option to settle payments in rupees for imports from Russia could be an additional incentive for users.
According to the analyst, the level of ex-Russia imports in real terms could be assessed after a week or two once both buyers and sellers get acclimatized to the new international trade settlement system in rupees announced last week.
The RBI has not yet announced names of countries for which this new mechanism would be used.
Since June, at least two major Russian mills have been active in HRC sales to India, having a lack of options due to the Western sanctions due to Russia's war against Ukraine. The latest offer from one large Russian mill was at $610/mt CFR, but on Monday market sources in India confirmed there are options to buy at $590/mt CFR and lower for smaller volumes. As SteelOrbis mentioned earlier, sales of ex-Russia HRC to India were done at $615-650/mt CFR in June.
$1 = INR 79.90
