Local Indian hot rolled coil (HRC) trade prices have continued to seek lower levels responding to the rise in inventories in distribution channels and have remained at a discount to the lower base prices announced by mills over the past week, SteelOrbis learned from trade and industry circles on Monday, June 6.
Indian trade HRC prices (2.5 mm and above) are down INR 2,500/mt ($32/mt) to INR 63,800/mt ($822/mt) ex-Mumbai and down INR 3,000/mt ($39/mt) to INR 63,500/mt ($818/mt) ex-Chennai in the southern regional market.
Sources pointed out that trade prices have remained at a discount even after the mills announced drastic cuts in base prices for the current month at levels ranging at INR 65,000-65,350/mt ($839-842/mt) ex-works, largely owing to inventory build-ups at traders from the sustained slowdown in stock movement.
“The approaching monsoon season will aggravate the ongoing market slowdown. Traders are already carrying large inventories and the usual demand weakening during the rainy season will keep prices under pressure,” a steel distributor said.
“A number of sectoral analysts are forecasting trade prices falling to INR 60,000/mt ($773/mt) by the end of the current quarter. This does not seem an impossibility under the current market scenario with more volumes flowing in for domestic sales as exports dry up. It is a chaotic bearish market and is expected to worsen going forward,” he said.
A section of the market has maintained that there are very few tools available for market participants to support the market disrupted abruptly by the government when it imposed a 15 percent export tax, when the Indian steel industry has been driven by overseas sales for the last two years. They said that the only tool that was available lies with the mills, which are all operating above 80 percent capacity utilization, to cut back on production, to bring some balance from the supply side.
$1 = INR 77.60
