Local Indian hot rolled coil (HRC) trade prices have surged as the market has rallied in reaction to base price increases by mills, the third upward revision in less than 30 days and the steady tightening of local supplies in the wake of rising overseas sales by producers, SteelOrbis learned from trade and industry circles on Monday, February.
Indian HRC trade prices have gained INR 1,200/mt ($15/mt) to INR 60,900/mt ($744/mt) ex-Mumbai and are up INR 1,000/mt ($12/mt) to INR 59,500/mt ($726/mt) ex-Chennai in the south.
Trade sources said that, in view of higher export allocations and strong overseas sales, rising input costs and mills attempting to either reduce booking volumes or extend delivery timelines indicated that producers are most likely to go in for another base price hike over the next couple of weeks, with the market expecting the increase to be around INR 1,000/mt ($12/mt).
“The inflow of volumes from mills to trade channels is slowing down and indicative of the sharp drawdown of available inventories. At least two large mills have indicated that they are fully booked for local deliveries for February,” a Mumbai-based distributor said.
“Several traders in the Mumbai area have been reporting that large mills are cutting down booking volumes by as much as 50 percent if deliveries are to be completed in the current month,” he said.
However, an official at an Odisha-based mill said that part of the price increase was driven by rising costs of iron ore and coking coal and most mills were passing on this rise in costs through hikes in base prices and accruals to margins are still limited.
As for mills cutting down volume bookings of trade channels, he said that various mills have adopted varied inventory management strategies, but his company never resorted to keeping long-term stocks for speculative gains in rising market conditions and had one of the lowest inventory levels irrespective of demand variations.
$1 = INR 81.90
