Local Indian hot rolled coil (HRC) prices have fallen to a six-month low during the past week amid a combination of low exports, rising mill-end inventories and limited trading volumes, with buyers deferring deals due to expectations of a further fall in traded prices and of January base price reductions by producers, SteelOrbis learned from trade and industry circles on Monday, December 27.
The traded price is down INR 1,100/mt ($15/mt) over the past week to INR 64,200/mt ($856/mt) ex-Mumbai, while a price as low as INR 63,500/mt ($847/mt) ex-warehouse was heard in the southern regional market in Chennai.
“Exports volumes have been on an extended decline and overseas sales are low owing to year-end considerations. The industry estimates that November exports are down 29 percent on month-on-month basis. This is creating a lot of inventory pressures on mills. Consumers are deferring bookings on perceptions that prices are yet to find a new bottom,” a Mumbai-based steel distributor said.
At least two other traders said that they have received “unofficial” indications that mills are already assessing a INR 1,500-2,000/mt ($20-27/mt) cut in January base prices, triggering low trading activity in the market.
According to a steel sector analyst with a Mumbai-based financial services firm, the usual demand uptick in the last quarter of the fiscal (January-March) year could be discounted as the index of industrial production, as per government data, grew at three percent in October, the lowest over the past eight months, and the low growth would ensure a dull performance of the manufacturing sector and derived demand for raw materials, further aggravating inventory pressures on mills.
He said that the Omicron threat and fears of another wave of the pandemic are also aggravating the bearish market sentiments and outlook.
$1 = INR 75.00
