Local Indian hot rolled coil (HRC) trade prices have continued to weaken with large industrial users adopting strict needs-based purchases and trade channels carrying large inventories and discounted sales by distributors becoming more widespread, SteelOrbis learned from trade and industry circles on Monday, January 29.
Sources said that HRC trade prices have settled down INR 100/mt ($1.20/mt) to INR 57,000/mt ($686/mt) ex-Mumbai and are down INR 100/mt ($1.20/mt) to INR 57,650/mt ($694/mt) ex-Chennai in the south.
However, the sources said that discounted sales have been reported across western and northern regional markets with distributors offering prices in the range of INR 54,000-56,000/mt ($650-674/mt) depending on the volumes booked.
“The market is in for a prolonged downturn and the local market is getting aligned to the global trend. Domestic demand is not growing to support rising supplies, with most large mills operating well above 90 percent plant capacity,” a Mumbai-based distributor told SteelOrbis.
“Industrial growth overall is slowing down, and this is reflected by end-users being extremely cautious over inventory management of raw materials to conserve cash even as sales growth is tapering. Distributor channels are carrying large stock build-ups at higher prices and are being forced to liquidated them at a discount, marking losses, and mopping up cash ahead of the close of the current fiscal year,” he added.
However, according to a marketing official at Tata Steel Limited, the sluggish market conditions are more “seasonal and in line with trends seen usually in the last quarter”.
He said that the market will find a balance between demand and supply once companies close their accounts and government spending ahead of the national elections around mid-year would offer the next driver to the market.
$1 = INR 83.10
