Local Indian hot rolled coil (HRC) trade prices have hardened substantially, reacting to higher-than-expected base price increases by mills, but the market has witnessed a significant fall in trading activity amid a combination of fatigue over the continuous rise in prices without commensurate demand improvements, and also given the festival holidays later this week, SteelOrbis learned from trade and industry circles on Monday, March 6.
Indian HRC trade prices are up INR 1,400/mt ($17/mt) to INR 60,700/mt ($740/mt) ex-Mumbai and have gained INR 1,000/mt ($12/mt) to INR 60,200/mt ($734/mt) ex-Chennai in the south.
They said that, with more base price increases expected by mills over the course of the current month, end-users have been restricted to need-based buying, while distributors are sufficiently stocked and unwilling to risk increasing inventories in rising market conditions.
“The uptrend in the domestic market is being driven by strong exports sales, enabling sellers to dictate local prices. This is risky as there is no sufficient demand growth to support higher prices. Macro-economic indicators like GDP growth, the rate of inflation and bank interest rate regime are negative, and hence trade activity is falling while the price is rising,” a Mumbai-based distributor said.
“It will be no surprise if discounting emerges at the trade level once business activity resumes after the mid-week festival holidays. There is too much stock held by market intermediaries and end-users are cautious in restocking raw materials,” he said.
Commenting on a recent higher-than-expected base price increase of up to INR 2,000/mt ($24/mt) across flat product segments, at least two officials at private mills said that most producers have been assessing market conditions and another base price increase of a similar amount could not be ruled out in March considering the robust order book positions of mills in March and high overseas shipments to be completed over the next few weeks, leading to tight supplies, and rising input costs of imported met coke and energy.
$1 = INR 82.00
