Local Indian hot rolled coil (HRC) prices have continued to lose ground with buyers expecting declines to be prolonged and hence they are keeping fresh bookings at minimal levels, and macro inflationary pressures and seasonal variations are expected to keep end-use demand weak, SteelOrbis learned from trade and industry circles on Monday.
Indian HRC trade prices have moved down INR 1,700/mt ($22/mt) to INR 61,300/mt ($782/mt) ex-Mumbai and down INR 1,000/mt ($13/mt) to INR 62,500/mt ($797/mt) ex-Chennai in the south.
According to a Mumbai-based steel distributor, the market perceives a deeper bottom during the ongoing monsoon season and trade prices have further downside risks, while trade channels are committing only small “need-based small-volume bookings spread across the month” to achieve lower average procurement costs.
At the same time, end-user industries are feeling the impact of the historically high inflation levels and, with demand weakening steadily, they are in no hurry to build inventories of raw materials, he said.
However, an official at a private mill said that the pace of decline in prices had slowed down as there has been some improvement in terms of the fall in inventory levels at producers following the recent base price cuts, and this has been offering modest support to the market.
He said that any further base price reduction in July would largely depend on mills’ ability to increase sales overseas. If local mills are able to improve volume sales overseas, it would ease supply-side pressures in the local market and the pressure on mills to go in for another price cut in the short term.
The cause of concern is that local mills are facing challenges in concluding deals in the Middle East and Europe, and the overall weak global demand is percolating into local market sentiments.
$1 = INR 78.40
