Local Indian hot rolled coil (HRC) prices have entered a downtrend over the past week after some stabilization, with industrial users reducing bookings, anticipating a slowdown in sales of finished products, and with a negative outlook on macroeconomic indicators under inflationary pressures weighing on market sentiments, SteelOrbis learned from trade and industry circles on Monday, June 1.
Sources said that HRC trade-level prices have edged down INR 100/mt ($1/mt) to INR 57,000/mt ($599/mt) ex-Mumbai and are down INR 400/mt ($4/mt) to INR 58,500/mt ($614/mt) ex-Chennai in the south.
According to the sources, large consumers have been turning cautious and reducing restocking volumes taking their cue from government austerity measures and the expected overall slowdown in economic growth and the inflation-driven demand depression for end products.
Most consumers have been resorting to immediate need-based restocking, resulting in rising inventories at the dealers’ end, with the latter dropping prices to push sales, the sources said.
“Inflationary pressures leading to a demand depression are having a big negative impact on trade activity. Stock movement is slow across the supply chain. There is strong resistance to higher prices at a time when the demand outlook is negative too,” a Mumbai-based distributor said.
“Market participants are also waiting for June base price signals from large mills. There is a strong possibility of producers hiking base prices by at least INR 750/mt ($8/mt), citing rising costs of imported raw materials. This will aggravate the slowdown,” he added.
$1 = INR 94.75
