Pressures have continued to build up in local Indian hot rolled coil (HRC) markets, with prices edging down INR 250/mt ($3.50/mt) week on week to INR 35,500/mt ($500/mt) ex-works amid thin trading activity during the past week, traders said on Monday, September 23.
“Neither market intermediaries nor end-users are willing to commit fresh bookings with the long festival holidays ahead next month. In depressed demand conditions, buyers are not willing to lock up cash ahead of the festivals,” a Mumbai-based trader said.
“Some mills are offering discounts of around eight percent on base prices to control inventory build-up. But reports suggest that even then sales are just not happening. Most large steel mills are carrying 60 to 70-day inventory against 40 days normally. Exports are also tapering off, putting further pressures on domestic prices,” the trader added.
Sources said that a section of the market is expecting that some price stability could emerge with a number of steel mills planning for an early routine plant maintenance shutdown during the festival holidays next month.
Some domestic steel mills have already been lowering capacity utilizations. Kalyani Steel has reported that it has lowered daily production by 25-40 percent over the past fortnight. JSW Limited reported a 13 percent drop in August production and said that the company along with the industry overall would consider sustained production cuts for the remaining quarters of the current fiscal year to overcome oversupply in the market and force supply-side price stability.
$1 = INR 71.00
