Local Indian local hot rolled coil (HRC) trade prices came under renewed pressures with buyers withdrawing to the sidelines, anticipating base price cuts by mills in August under inventory pressures and with trade channels completing restocking in the near term, SteelOrbis learned from trade and industry circles on Monday, August 1.
Indian HRC trade prices have lost INR 1,800/mt ($23/mt) to INR 57,800/mt ($723/mt) ex-Mumbai and are down INR 1,000/mt ($13/mt) to INR 58,800/mt ($736/mt) ex-Chennai in the south.
According to the sources, the rise in trading activity seen earlier in the month tapered off with distributors having already build up stocks to meet the soft demand outlook and at the same time expecting mills to cut base prices marginally by around INR 1,000/mt ($13/mt), being reconciled to sustained slow movement of stocks in the market and lower sales overseas.
“Most mills, while announcing their first quarter results, have given guidance that declining sales and pressures on margins from low prices will continue well through the second quarter (July-September). Trade prices at best will move within a narrow range in either direction as pent-up demand has already been met early in the month,” a Mumbai-based distributor said.
Several sources in trading circles and at steel mills said that fresh pressures on prices are emerging as import volumes of ex-Russia HRC start to land at Indian ports.
They said that an estimated 24,000 mt of ex-Russia HRC has already landed at Indian ports and another 80,000 mt which have been booked are expected to land over the next few weeks at an average price not exceeding $620/mt CFR. At the same time, the most recent sale for late August shipment was done at around $610/mt CFR. And considering this to be a big discount on local trade prices, mills will be challenged to maintain higher prices at a time when stock movements from mills to the market are slowing down too.
“The opening up of a new Russia-Iran-India trade corridor and options of importers to settle trades in dollar-alternative currencies will keep inward shipments rising. The cheap imports will add to pressures on local mills to cut prices. But indications are that local mills will assess total imports in August before taking a call on base price revisions,” a steel sector analyst at a Mumbai-based financial advisory firm said.
$1 = INR 79.90