Indian
billet prices have shed INR 500/mt ($9/mt) since the beginning of this week, falling to INR 35,000/mt ($630/mt) ex-warehouse amid low demand coming from rolling mills, a trader based in the steel trading town of Mandi Govindgarh in northern
India stated yesterday, July 26.
"Demand for long steel products is extremely weak, negatively affecting prices of billets. Construction activities have been dealt a double blow by monsoon rains and high interest costs of borrowings," the trader said.
Indian
billet producers are incurring large losses in maintaining production in the face of falling demand owing to the rising domestic price of iron ore. Even though international iron ore prices have moved down around $20/mt since the beginning of this month, NMDC,
India's largest iron ore producer, has shifted away from benchmarking the domestic price to the international price and has instead adopted a price linked to domestic demand, a Mumbai-based trader said.
Billet producers have been in no position to pass on higher input costs owing to weak demand and have been forced to cut prices to liquidate stocks in order to maintain cash flows, he added.
Citing Indian manufacturing growth of 2.4 percent (month on month) and a decline in domestic capital goods output of 7.7 percent, both in May,
billet prices will continue to remain under pressure with the possibility of losing another $5-6/mt before the end of the current month, unless the Reserve Bank of
India (RBI) cuts interest rates during its mid-term credit review scheduled on July 31, the trader said.