India’s domestic Hot Rolled Coil (HRC) prices remained range-bound this week on subdued demand and bearish sentiments prevailing in the domestic market. Prices continued to remain under pressure on higher inventories among traders. SteelMint’s benchmark prices for 2.5mm thickness HRC stands at INR 53,500-54,500/t (exy-Mumbai), up by INR 250/t w-o-w.
*As per SteelMint HRC price methodology.
HRC trade prices expected to be bearish in near term for following reasons:
1.Increase in iron ore supplies-
SteelMint’s weekly index for Odisha iron ore fines (Fe 62%) has come down further by INR 50/t to INR 5,200/t (ex-mines, including Royalty, DMF & NMET). Serajuddin mines have resumed iron ore offers on 16th Feb after a gap of over two months. Market insiders are expecting prices to correct further as two of Odisha’s auctioned mines – Guali and Jilling have commenced production with a combined capacity of about 12 mn t pa. India’s largest iron ore miner – NMDC has restarted operations at its Donimalai iron ore mine, the company said in its recent BSE filing. This, in turn, may lower steel prices in the near term.
2.Stockist holding sufficient inventories-
Earlier when prices were peaking at an abnormally high rate, the big distributors procured huge quantities of HRC to balance out the overall cost of procurement and manage their profit and loss accordingly as the market was very volatile. This move has led them to a point where they have sufficient inventories with them and the panic to procure stocks does not exist.
On the other hand,Indian mills are adopting a wait and watch approach:
1.Mills are yet to have a re-look at their pricing strategy-
India’s largest automaker recently agreed to an interim hike of INR 7,350/t ($102) in flats and INR 6,200/t ($86) in longs for Q4 FY’21 in the wake of a widening gap between spot and contract prices,SteelMint learned from its credible sources.
2.Indian mills exploring export options-
Indian mills are also exploring export opportunities due to a subdued domestic market. Mills have recently resumed HRC export offers for Vietnam after a long gap and are offering around $740/t CFR. Meanwhile for UAE, major steel manufacturers are eyeing around $745-750/t CFR basis and for Europe offers are around $825/t CFR basis for Mar-Apr shipments.
Near term outlook-
Few major Indian steel mills are ready to offer discounts/ rebates of around INR 2,000-3,000/t however it will differ from case-to-case basis, SteelMint learned from a Faridabad-based major stockiest. It will depend on the quantity traded and MOU signed by the distributor with mills. Meanwhile, mills will also look at HRC export offers to Vietnam due to bearish sentiments in the domestic market.
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