Poor sentiment in local Indian HRC market amid low industrial growth data

Local Indian hot rolled coil (HRC) prices have showed no change at INR 41,000/mt ($676/mt) ex-works during the past week amid dull market activity and a lack of confidence among buyers, traders said on Tuesday, September 2.
 
Two Mumbai-based traders said that buying activity in the market had fallen, with dealers reluctant to conclude fresh bookings since HRC inventory movement has slowed down.
 
The traders said that sentiment has taken a turn for the worse since the much expected turnaround in industrial demand has not materialized, as indicated by government data.
 
On Monday, data released by the Indian government showed that core sector index that measured output of eight infrastructure industries was up just 2.7 percent during July this year, compared to the seven percent rise recorded in June. The eight industries included coal, electricity, crude oil, natural gas, steel, cement, fertilizer and refinery products.
 
"There is no direction in the market and local HRC prices have been stagnating. Prices have not reacted downwards simply because local steel mills did not announce revised prices and also due to low import competition with the Indian rupee remaining weak," one trader said.
 
Market sources said that HRC prices are expected to continue to move sideways and buyers will remain cautious unless uncertainties over base prices are resolved.
 
Local steel mills will have to make a call based on the increased costs from the 2.5 percent import duty on coking coal imposed in June, the higher dependency on imported iron ore, and on whether they will be able to absorb or pass on the higher costs to consumers, and this decision will drive short-term prices, the sources said.