Domestic HRC prices in India have remained under pressure over combination of factors like falling trades in domestic market, limited export bookings over lowered prices and parity in imports. This week market remained soft over bearish market sentiments and sluggish demand prevailing in domestic market.
In traders market, HRC prices have weakened by INR 500-1000/MT W-o-W. Thus market sources shared that major Indian steel mills may provide discounts and rebates in upcoming month by around INR 1000-1500/MT to escalate buying interest. However major Indian mills continue to hold same offers this week.
Current trade reference prices for HRC (IS2062) 2.5 mm-8 mm is around INR 46,500/MT (ex-Mumbai), INR 47,000/MT (ex-Delhi) and INR 47,000- 47,500/MT(ex-Chennai).The prices mentioned above are basic prices excluding GST @ 18% on cash payment basis.
Currently trade reference prices for CRC (IS513) 0.9mm is hovering in the range of INR 52,500/MT (ex-Mumbai),INR 53,000 – 54,500/MT (ex-Delhi) and INR 53,000/MT (ex-Chennai).The prices mentioned above are basic prices excluding GST@18% on cash payment basis.
Following mentioned reasons have resulted to fall in HRC prices
1.Limited HRC export deals from India – Indian mills have not been able to make significant export bookings this month so far amid steep decline in global offers. Cheaper HRC offers from China & CIS have collectively pulled down prices.Thus mills were having minimal focus in HRC trades to export market.Recently major Indian mill has concluded an export deal of around 10,000-20,000 MT HRC to Vietnam at USD 562-565/MT CFR basis for November shipments. Indian HRC export offers have come down by around USD 15/MT M-o-M.
2. Parity in imports makes importers active- Indian importers based in southern India have reduced HRC export offers. Around 26,000 MT HRC has been booked at USD 605-610/MT, CFR Chennai for November shipments.Thus landed cost of HRC is coming around INR 46,000-46,500/MT. On the other hand, domestic HRC prices in Chennai are around INR 47000/MT (basic, GST extra). Importers are in talks for further bookings for december shipments.
3. Flat steel production of major Indian steel mills up in Q2- India’s major JSW steel flat steel output on Q-o-Q basis moved up by 3% to 2.96 MnT in Q2FY19 which was 2.87 MnT in last quarter. Meanwhile Tata Steel- registered growth of 3% Q-o-Q basis in its standalone crude steel output to 3.27 MnT in Q2 FY19 as compared to 3.18 MnT in Q1 FY19. JSPL’s crude steel output stood at 1.3 MnT during Jul-Sep’18. On quarterly basis company’s steel production was slightly up by 6% compared to 1.23 MnT in Q1 FY’19 (Apr-Jun’18).
Thus increased production, limited exports and import parity may result in increase in inventories which may pressurize domestic HRC prices in near term.
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