Although local Indian hot rolled coil (HRC) prices have officially inched up over the past week, market sources report that mills have been offering discounts on base prices to push higher volumes into the market due to thin trading conditions and low procurement from end-users, SteelOrbis learned from trade and industry circles on Monday, December 11.
Sources said that HRC trades have price edged up by INR 200/mt ($4/mt) to INR 58,300/mt ($700/mt) ex-Mumbai and are unchanged at INR 58,750/mt ($705/mt) ex-Chennai in the south. However, mills are offering discounts in the range of INR 1,500-2,000/mt ($18-24/mt) on base prices for November, contrary to expectations of a base price increase, and thereby indicating that the market may be moving into an oversupply situation.
“There are a number of pressures emerging in the market. Trade channels are facing challenges in accessing bank funding and are thereby tightening liquidity and limiting restocking activities. End-use industries too are lowering procurement facing a slowdown in sales growth,” a Mumbai-based distributor told SteelOrbis.
“The start of discounting by mills is a surprise when most market participants were expecting a base price increase in the face of the rise in input costs. The trade level price is hence expected to get onto a downturn in the coming weeks,” he added.
At least two officials have expressed concerns over rising import competition and the bearish impact on the local market. They pointed out industry estimates of 1.8 million mt of HRC and plates shipped into the country in November, the highest monthly imports in the current year, compared to 235,000 mt in September and 585,000 mt in October. They said higher imports and the rise in mill-end inventories of HRC would continue to depress market conditions, reflected in the commencement of discounted sales by producers.
$1 = INR 83.30
