Local Indian hot rolled coil (HRC) prices have edged up but the post-festival revival in trade activity is reported to be “unusually slow”, coupled with several state-level elections underway casting uncertainties over the market trend, SteelOrbis learned from trade and industry circles on Monday, November 27.
Sources said that HRC trade prices are up INR 400/mt ($5/mt) to INR 58,000/mt ($696/mt) ex-Mumbai and up INR 200/mt ($3/mt) to INR 58,650/mt ($704/mt) ex-Chennai in the south.
According to sources, the gains over the past week did not instill much confidence among market participants as they came on the back of extremely thin trading volumes and trade channels have yet to resume restocking since the end of the festival holidays early in November. A section of traders said that distributors are deferring fresh bookings owing to elections in several states, the outcome of which would offer political indications for the national-levels polls slated next year, and thereby for the level of political stability.
At the same time, following significant import volumes ordered in October and November, mainly ex-China HRC, trade activity has also been minimal. Besides, although ex-China prices have increased to around $603-605/mt CFR for January shipment, up by $10-13/mt since mid-November, some Indian customers have reported negotiations “as import HRC is still offered at much lower levels than local materials, even despite the price hikes.”
“It is very surprising that overall business activity is so slow. There is hardly any usual post- holiday restocking in trade channels. It is very difficult to anticipate the short-term market trend. Politics will play an important role in emerging sentiments. But there are very real fears that demand may have peaked,” a Mumbai-based distributor told SteelOrbis.
“Our assessment is that, in the case of large mills, politics and several state and national elections ahead will play a role. Price increases by producers will have a political tone in the months ahead as the government will unofficially not take aggressive base price increases favourably. Hence, for market participants it is time for caution,” he added.
$1 = INR 83.30
