- Tight supplies, liquidity issues keep prices firm
- All eyes now on mills’ list price announcements
Trade-level coated flat steel prices showed a mixed trend this week. Galvanised plain steel coil (GP) prices stood range-bound in key markets but increased by around INR 100-300/t ($1-4/t) w-o-w in a couple of other regions under assessment. Meanwhile, pre-painted galvanised iron (PPGI) prices also stood unchanged this week.
The latest weekly assessment, on 15 May, shows galvanised plain (GP, 0.8 mm/CTL, 120 gsm, IS277) steel coil prices at INR 65,500/t ($767/t) exy-Mumbai, with offers varying in the range of INR 65,000-66,000/t ($761-772/t) exy-Mumbai, unchanged w-o-w. Similarly, pre-painted galvanised iron (PPGI, 0.5 mm/CTL, 90 gsm, IS14246) was assessed at INR 74,700/t ($874/t) exy-Mumbai, with offers at INR 74,000-75,000/t ($866-878/t). Prices are minus GST at 18% (USD 1 = INR 85.4482; INR 1 = USD 0.011703).
Market updates:
Waning demand, limited supplies keep prices stable: Demand from major coated flat steel end-buyer industries started waning in the latter part of the first fortnight of the month, compared to the uptick being witnessed in the initial days. Distributors complained about delays in credit recovery, which hints toward a possible liquidity crunch, while supply dynamics differed in multiple locations.
“Distributors were quoting higher by around INR 500/t at the beginning of the week but had to roll this hike back to previous levels as inflow of inquiries started to reduce in the first couple of days. Credit recovery was also a challenge. Inventories in the channel are low as of now and supplies from the mills are also erratic and falling short of the quantity raised in the purchase orders,” a western region-based distributor said.
On the contrary, sources in the north said the distribution network has decent inventory. However, sellers here have been challenged by weakening demand in the last 5-7 days.
Market sentiments mixed: At present, the end-buyer community is divided into two distinct segments with regard to their prevailing sentiments. One group projects that inquiries will gain momentum driven by heightened buyer engagement as the monsoon season draws near. Whereas, the other set opines that inquiries will stay low and hinder prospects of further rise in prices. Woes of distributors are increasing amid the tug-of-war between the supply and demand aspects of the trade.
Outlook
Trade-level prices are likely to stay range-bound in the near term. The mixed views in terms of demand, supply-related hassles and the price momentum of substrate products will pose challenges for distributors and deter them from seeking higher prices. Moreover, with the advancing monsoon, the strong pre-monsoon restocking period is also shortening. Thus, both buyers and sellers in the distribution channel will be keenly looking out for the mills’ list price announcement for the upcoming month for some clarity.
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