The recent uptrend in local Indian hot rolled coil (HRC) market was reversed with trade prices suffering setbacks from buyers’ resistance, slowdown in stock movement from mill to trade and differences brewing on credit terms between buyers and distributors, SteelOrbis learned from trade and industry circles on Monday.
Sources said that HRC trade price lost INR 500/mt ($6/mt) at INR 52,500/mt ($614/mt) ex-Mumbai and also down by INR 500/mt ($6/mt) at INR 53,500/mt ($626/mt) ex-Chennai in the south.
This downturn was attributed to buyers only making cautious, need-based bookings. Many buyers were seeking extended credit terms of more than 30 days to confirm bookings at higher prices, but most distributors were declining such credit, which led to a fall in bookings across market segments.
Sources said that user industries were facing a liquidity shortage and seeking to lower cash outflows through credit extensions on raw material purchases. However, distributors were unwilling to increase sales on longer credits, which would impact their own cash flows, resulting in a logjam situation.
"Demand is weakening, and the recent base price increases imposed by mills are clearly not being absorbed by the market. Stock movement is slowing down, impacting prices and offsetting the possible imminent tightening of supplies, with two large mills going into planned maintenance shutdowns this month,” said a Mumbai-based distributor.
“The mood is bearish as loss in trade price is coming even as import pressures are easing month on month, with not more than 70,000 mt of imports scheduled to arrive at ports during remaining period of this month,” he said.
$1= INR 85.56