Local Indian hot rolled coil (HRC) trade prices have showed minor regional changes amid relatively stable conditions, but market activity is limited amid the uncertainty surrounding the August base price changes of mills, SteelOrbis learned from trade and industry circles on Monday, July 25.
Local Indian local HRC trade prices have remained stable at INR 59,600/mt ($745/mt) ex-Mumbai and are marginally down by INR 200/mt ($3/mt) to INR 59,800/mt ($748/m) ex-Chennai in the south.
According to the sources, there has been no unanimity in the market over the possible August base price changes of mills, and hence trade channels have been unwilling to build up inventories.
“Domestic demand remains sluggish and concluding export deals has become a challenge owing to the sharp fall in workable prices in most destination markets. But domestic prices are already close to the bottom and hence producers have limited flexibility to use price changes to drive demand,” a Mumbai-based steel distributor said.
“In our assessment, mills’ base price in August will be driven by the impact of some mills bringing forward annual maintenance shutdowns on aggregate industry level inventories. We do not expect a big movement in either base or trade prices in August,” he said.
However, some in trade circles pointed out that new more negative domestic market dynamics may come into play in the case of increasing ex-Russia HRC supply at discounted prices.
Sources said that an estimated 24,000 mt of ex-Russia HRC landed at Indian ports lately. The most significant is that these trades were settled by importers in the Chinese or UAE currencies as alternatives to the US dollar or euro.
Settling trades in alternative currencies offered importers risk cover against the Indian rupee’s rapid depreciation against the US dollar, with the currency currently at an historical low. At the same time, market reports suggest that the landed price of ex-Russia HRC worked out at a discount of around INR 3,000-5,000/mt ($37-62/mt) over current domestic trade prices.
According to speculations in the market, booking volumes for ex-Russia HRC by Indian buyers could be as large as 200,000 mt over the next one to two months if such levels of discounts of imports compared to local prices is sustained.
Such a large volume of imports, generally not heard a year ago, would bring in new threats to local prices of domestic mills, trade circles said.
The latest offers from Russian mills have been still at $610/mt CFR India, while the tradable level could be lower, down to $590/mt CFR, according to sources.
$1 = INR 80.00
