Local Indian hot rolled coil (HRC) prices have remained unchanged during the past week at INR 45,200/mt ($646/mt) ex-works with market activity showing signs of tapering off in response to weak manufacturing sector outlook and positives of export shipments ignored by market participants, traders said on Monday, August 20.
“The slight recovery in HRC prices seen earlier has eased off during the past week with buyers such as dealers and end users reducing fresh bookings in view of negative manufacturing sector outlook,” a Mumbai-based trader said.
“With the overall growth prospect being weak and local steel mills unlikely to adjust their base prices, I would expect local HRC prices to move within a narrow range unless there is a dramatic change in key drivers like government expenditure which also seems unlikely in the short term,” the trader added.
Sources said that the HRC market sentiments were impacted by the slowdown in manufacturing sector index which was lower in July 2018 as compared to the corresponding month of the previous year while a report of Reserve Bank of India (RBI) on Business Expectation Index for the coming quarter (July-September 2018) showed a fall and most market participants had taken note of these bearish macro indicators leading to low market activity.
According to two other traders, there are reports of at least two large local steel mills concluding HRC export shipments to Europe for September delivery but this has failed to improve weak sentiments in the market.
They said that even the prospect of local steel mills increasing their base prices next month did not trigger any fresh buying.
Market sources said that local steel mills are most likely to revise their base prices to offset cost push from higher price of imported coking coal with the Indian rupee breaching an all-time low of INR 70 to a dollar during the past week.
$1 = INR 69.80