Local Indian hot rolled coil (HRC) prices have continued on their prolonged downtrend and the recent base price reductions by mills have yet to have any impact on low trading activity as trade channels and end-users have stayed on the sidelines, SteelOrbis learned from trade and industry circles on Monday, May 8.
Despite mills dropping base prices, this has still failed to spur fresh bookings and trade prices have remained at a discount to the base prices of producers. Trade HRC prices are down INR 100/mt ($1.20/mt) to INR 59,000/mt ($720/mt) ex-Mumbai and are down INR 500/mt ($6/mt) to INR 57,000/mt($696/mt) ex-Chennai in the south.
Most market participants expect trade prices to remain under pressure weighed down by lackluster exports and the possible start of diversion of high export allocations to domestic sales.
A number sources in trade circles have confirmed that rising import competition has been contributing to local prices coming under pressure. Even though the definitive figure on the volume of inward shipments in April is not available yet in industry circles, it has been confirmed that at least one deal for ex-China HRC was concluded over the past week at $620/mt CFR for end-of-June shipment.
Though unconfirmed, it was heard in the market that a deal as low as $615/mt CFR Mumbai for an undisclosed tonnage of ex-Vietnam origin. another Vietnamese mill, which can offer better quality HRC, has concluded a deal at $660/mt CFR.
“The large discount on the landed price of imports to local trade prices is a big indicator of the continuing downside risks to current local prices. The market is on a knife-edge at the moment. The fundamentals of demand are extremely weak. Even medium-scale end-users are increasingly looking at import sourcing, as the landed price is very competitive,” a Mumbai-based distributor said.
“Though it is still early in the month, the oversupply in the local market triggered by the export slowdown will force mills to consider a second base price reduction in the coming weeks and hence is prompting trade channels to further defer any fresh bookings,” he said.
$1 = INR 81.90