Sluggish trading conditions in the local Indian hot rolled coil (HRC) market have pushed tradable prices down further during the past week. The main factors in the market at present are buyers’ resistance and expectations of a firm correction, traders and market participants said on Monday, February 1.
The traders and market participants said that producers have desisted from a second base price increase during January as earlier announced at the beginning of the year, indicating that higher prices have not been finding acceptance in the market despite strong demand, while the market may be in first stages of an oversupply situation.
Sources said that integrated steel mills have maintained base prices at levels of INR 52,500-53,500/mt ($719-733/mt) ex-works, but tradable prices ex-Mumbai and ex-Chennai have softened by INR 1,000/mt ($14/mt) to INR 54,500-55,000/mt ($746-753/mt) ex-works compared to trades at INR 55,500-56,000/mt ($760-767/mt) ex-works a week ago, indicating high premiums were being rejected by end-users.
“The market is cooling down, but it is still too early to take a call on a correction setting in. Producers have taken a pause from increasing prices, waiting to see if the government intervenes in regulating prices as being discussed in several ministries. Buyers, end-users and dealers have reduced restocking, preferring to wait for the national budget today and to estimate the impact of the expected increase in government spending on infrastructure,” a steel sector analyst at a Mumbai-based financial services company said.
“Conflicts over high prices between producers and buyers are mounting every day. We have to wait and see which side prevails. International finished steel prices are softening but this is not yet a trend. But more than international prices, government spending will give new direction to markets, as local producers are enjoying strong protection from imports anyway,” he added.
$1 = INR 73.00
