Domestic prices of hot-rolled coils (HRCs) and cold-rolled coils (CRCs) continued to decline for the fifth consecutive week. The continual decline in export offers on the back of slow demand is weighing on buying sentiments.
SteelMint’s benchmark HRC (IS 2062, 2.5-8mm) prices were assessed at INR 65,000-65,500/t (down, INR 1,500/t), while those of CRCs (IS 513 Gr O, 0.9mm) were at INR 69,500-70,500/t (down INR 2,300/t). The prices mentioned above are on an exy-Mumbai basis, and exclusive of GST @ 18%.
Dropping HRC export offers weigh on sentiments: The continual decline in HRC exports from Indian mills has weighed on the buying sentiments in the domestic market as well. SteelMint’s India HRC export offer has also dropped for five consecutive weeks from $877/t FOB East coast at the beginning of Nov’21 to $773/t FOB this week.
Furthermore, export volumes from India have been on a continual decline since July’21 when 0.83 mnt of HRC/plates were exported. The exports volumes have gradually declined since then. Moreover, the volumes were slashed by 85% m-o-m to 0.25 mn t in Nov’21.
This has led to concerns over increasing stockpiles with mills which are currently weighing on both export offers and domestic market prices.
Restocking demand remains low: The procurement cycles of distributors and stockists is being impacted by the slower downstream sales. This is also keeping the prices under pressure with sellers trying to liquidate their inventories.
However, sales of major OEMs are likely to improve in the upcoming month with the new year approaching, which is going to show more demand from this sector.
Outlook
Although global HRC prices are on a decline, it is unlikely that the import volumes will increase. It is likely that mills will correct prices further owing to the piling inventories. This would lead preference away from imports although the landed prices of imports from FTA countries are almost at par with domestic rates.
There will likely be a gradual reduction in prices by mills as the recovering prices of imported coking coal may lend some support. For instance, prices of premium HCC (Australian origin) coking coal have risen from around $336.49/t CFR India a few weeks back to $359.77/t CFR and further up to $362.33/t CFR this week.
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