Local Indian hot rolled coil (HRC) prices have continued to lose ground amid the near total absence of demand, with distributors halting restocking, and other market participants awaiting clarity on potential tariff barriers to imports, SteelOrbis learned from trade and industry circles on Monday, September 16.
Sources said that HRC trade prices have lost INR 800/mt ($10/mt) to INR 48,200/mt ($574/mt) ex-Mumbai and are down INR 100/mt ($1.2/mt) to INR 50,050/mt ($597/mt) ex-Chennai in the south. “The local prices for HRC in the Indian market are hovering at around INR 48,000/mt level, but we have limited buyers at this price. In fact, mills have started to give some discounts selectively to buyers,” an Indian trader told SteelOrbis, adding, “We are still not seeing signs of improvement in local demand, but we are expecting some pick-up within this month.”
At the same time, according to market insiders, even though no fresh import bookings have been reported over the past week, this has not had any salutary impact on market conditions as there are surplus inventories across the supply chain and neither trade channels nor large industrial users have been willing to make any fresh commitments.
Furthermore, the market has been banking heavily on antidumping (AD) investigations initiated on imports of HRC and some tariff barriers to be put in place, but acknowledges that the process of completing investigations and the formalities of notifying and giving effect to levies are usually long and protracted.
“Current steel prices are not sustainable. Indian prices are now at around a three-year low. The negative interplay of rising imports and falling exports together with weak domestic demand is having a severe impact on domestic prices,” a steel sector analyst with a Mumbai-based financial advisory firm told SteelOrbis.
“It should be noted that even three years ago when prices were at what they are now, margins from sales were still better when the coking coal price was $100/mt against $300/mt now. So, these are perfect bear market conditions, with low finished product prices and high input costs,” he added.
Thus, most market insiders are still agreeing that no immediate recovery is expected in the HRC segment based on the fundamentals of demand and supply. The market can only find support if a ‘Bharat Border Adjustment Mechanism’ as suggested by some producers, that is additional eight percent import duty based on imported steel originating from some countries, is agreed and imposed by the government.