Local Indian hot rolled coil (HRC) prices have continued to be traded with deep discounts amid falling demand during the lean monsoon season and with the lack of policy direction from the government making the long-term outlook bearish, SteelOrbis learned from trade and industry circles on Monday, July 1.
Sources said that discounted HRC trade prices have slumped to levels of INR 52,400/mt ($628/mt) ex-Mumbai, compared to INR 53,000/mt ($635/mt) ex-Mumbai a week ago, while trades have been reported at below INR 54,000/mt ($647/mt) net of discounts ex-Chennai. According to sources, dual pressures are mounting on mills, with input costs rising on the one hand and stock movements of finished products slowing down, leading to inventory build-ups.
Large industrials have adopted a stance of extreme caution on raw material restocking in the face of the manufacturing slowdown and both trade channels and mills are only able to push volumes in the market at discounted prices.
“There is no indication on the base pricing of mills for July. Any attempt to increase base prices in reaction to input cost increases will aggravate the bearish market condition and further slow down stock movements, leading to higher inventories. There are no winnable moves in the market either for trade or producers,” a Mumbai-based distributor told SteelOrbis.
“While import figures for June have not come in yet, it is estimated that total imports during April-June could be in the region of 1.95 million mt, which will put pressure on producers,” he added.
According to an official at Tata Steel, market conditions are not supportive and prices at the trade level still have significant downside risks, but producers will have to take a call soon on how to adjust to higher input costs.
$1 = INR 83.50