Local hot rolled coil (HRC) trade prices have continued to weaken amid limited trade activity and surplus inventories across the supply chain and given the continuing rise in import bookings.
Sources said that HRC trade prices are down INR 200/mt ($2/mt) to INR 50,000/mt ($600/mt) ex-Mumbai and down INR 100/mt ($1/mt) to INR 50,900/mt ($611/mt) ex-Chennai in the south.
According to sources, trade activity has been limited by the weak demand seen from industrial users and by buyers expecting price to fall further in view of surplus inventories held by mills and in trade channels.
At the same time, import pressures are expected to be sustained, with trade circles estimating 318,000 mt of imported HRC bookings will arrive at Indian ports by mid-September.
Several market participants said that buyers are also deferring new bookings, awaiting September base price signals from mills, with a large section of buyers expecting that producers will be forced to drop ex-mill prices to liquidate inventories and given the pressure from imports.
“Fundamental industrial demand is not seen to be reviving and hence no one is willing to restock material beyond immediate needs. Reports on Indian GDP growth at 6.7 percent in the first quarter (April-June), the lowest in the last 15 months, have further aggravated the negative outlook on industrial growth,” a Mumbai-based distributor said.
“Import pressure is unrelenting. The floodgates of ex-China imports have opened up. This will not only impact current operations of local mills and margins from sales, but sustained import competition can also force local mills on new capacity expansion plans in the longer term. We do not see any relief from antidumping investigations either because the process of investigations, recommendations on a tariff rate, and making it effective takes a long time,” he said.
$1 = INR 83.90