Local Indian hot rolled coil (HRC) traded prices have moved down, reacting to cuts in prices announced by steel mills due to the weakening of demand, SteelOrbis learned from trade and industry circles on Monday, December 6.
Reflecting slowdown in stock movement and the weak market outlook, local HRC traded prices are down INR 1,500/mt ($20/mt) over the past week to INR 67,500/mt ($900/mt) ex-Mumbai.
This is against effective base prices of mills ranging at INR 67,500-68,000/mt ($900-907/mt) ex-works for December. JSW Steel was the first off-the-block in announcing price cuts at INR 2,000-2,500/mt ($27-33/mt) late last week. After this, many other large producers made similar moves.
“Discounts of traded prices to base prices of producers have been negated following new prices announced by steel mills. But the secondary market is still precariously poised and faces downside risks as movement of stocks at dealers is slowing down every week,” a Mumbai-based distributor said. “Market intermediaries are in wait-and-watch mode. Producers are attempting to support the market by passing on the benefits of the fall in raw material prices. But this is unlikely to be enough. Near-term demand is foreseen to weaken further and traded prices will be forced to seek lower levels as dealers keep trying to push volumes in the market,” he added.
“Local producers are responding with market support initiatives against the backdrop of steadily declining international prices and the slowdown in movement of inventories to the market,” a mill’s source said. “However, the loss in margins from the reduction in base prices will be limited by the fall in key raw materials like local prices of iron ore and import prices of coking coal in recent weeks,” he said.
According to a steel sector analyst with a Mumbai financial advisory firm, import competition is seen to be emerging and it is to be seen how this gathers momentum in view of declining international steel prices. He said that already during the second quarter (July-September) flat product imports were up five percent to 0.89 million mt and the fall in global prices in November-December will lead to an increase in inward shipment volumes and import competition may put pressure on local prices.
$1 = INR 75.00