India: HRC trade market prices show mixed trends as demand softens during holidays

• HRC prices remain rangebound in key markets
• Enquiries and sales decline

Holidays in the past week and the delayed resumption of work this week has kept the market mostly muted, while prices contiuned to show mixed movements. Prices of HRC declined in most of the markets barring Mumbai where they remained stable.

SteelMint’s weekly benchmark price assessment for HRC (IS2062, 2.5-8mm) stands at INR 57000-57,500/t, while CRC (IS513 Gr O, 0.9mm) prices are at INR 67,000-68,000/t. Prices are exy-Mumbai, excluding GST at 18%.

Factors impacting the market 

a) Limited activities during holidays: There have been limited activites this week and the preceding one. This is mostly due to the lower number of active participants amid holidays on account of Muharram and Independence Day in the previous weeks and Janmashtmi this week. “Demand has been low this week compared with earlier weeks. Enquiries dropped and so did sales,” informed sources in key markets. Participants opine that activities should pick up next week as buyers start stocking before the festive season begins.

b) Overseas activities turn slow: Unlike domestic trade activities, overseas trades also declined over the holiday period in the Middle East and decline in offers from Vietnamese mills for domestic sales. Formosa Ha Tinh has reduced its skin-passed HRC (SAE1006) October and early-November prices to $615/t CIF HCMC a couple of days back. Hoa Phat announced a price of $595/t CIF HCMC for non-skin passed yesterday. This has kept offers unchanged in key exports markets. Thus, SteelMint’s India HRC (SAE1006, boron added) export index remains unchanged at $583/t FOB east coast this week.

Furthermore, demand in markets such as Nepal and Europe continues to remain muted amid seasonal disruptions in both countries.

This also weakened the domestic market sentiments a bit which had shown some improvement over the past 4-5 weeks.

b) Manufacturing indices showing slow growth: The pace of recovery in demand subsided this week on limited activities amid holidays. “Easing of inflation has helped support demand, but entering into the festive season the demand is likely to remain low now,” said a distributor source based in north India.

The manufacturing indices have shown better perfomance over the past few months. However, growth is still slow. India’s Industrial Production (IIP) index for the manufacturing sector continued rising by 1.3% m-o-m and 12.5% y-o-y in June at 136.3 points. Meanwhile, the Purchasing Managers Index (PMI) was at 56.4 in July, increasing by 5 m-o-m. On a yearly basis, the PMI rose by a megre 2%.

c) Tight supply lends support to prices: Limited availability of materials in the market over the last few weeks have lent some support to prices. However, market partcipants anticipate a minor drop in the prices in the near term as prices are edging close to the bottom. “The trade level prices are mostly near the bottom, still there is some room for a drop in prices. However, the quantum of decline won’t be much,” said a major Mumbai-based distributor. Demand is mostly likely to follow the annual trend of remaining on-and-off until the Diwali festival, he added.