- Liquidity issues keep prices firm
- Early monsoons impacts optimism
Trade-level coated flat steel prices stood their ground this week. The market situation showed minimal to no signs of improvement marring the optimism about a potential recovery. The early arrival of monsoons is adversely impacting market sentiments.
The latest weekly assessment, on 22 May, shows galvanised plain (GP, 0.8 mm/CTL, 120 gsm, IS277) steel coil prices at INR 65,500/t ($762/t) exy-Mumbai, with offers varying in the range of INR 65,000-66,000/t ($756-768/t) exy-Mumbai, unchanged w-o-w. Similarly, pre-painted galvanised iron (PPGI, 0.5 mm/CTL, 90 gsm, IS14246) was assessed at INR 74,600/t ($868/t) exy-Mumbai, with offers at INR 74,000-75,000/t ($871-872/t). Prices are minus GST at 18% (USD 1 = INR 85.9793; INR 1 = USD 0.0116307).
Market updates
Low demand, uneven distribution of supplies: The prevalent low-demand scenario in the market has remained a point of concern for distribution network participants this month. The liquidity cycle has also been disrupted, and many distributors complained about delays in credit recovery. Inquiries in the market have been tumbling, raising concerns for distributors and pushing them to chase buyers to liquidate their inventories.
Moreover, inventories are unevenly distributed in the distribution channel in different regions of the country. Where demand is low in almost all regions, supplies in the north and east are decent compared with the issues of short supplies faced by distributors in the west and south.
“It is turning out to be challenging to bring in inquiries despite May being the peak month for coated flat steel product sales. There are only a few buyers in the market with upfront requirements, thus sellers are forced to seek the latter. This has pushed distributors in the region to quote lower to entice potential buyers,” said a distributor for the northern region.
Many distributors have complained about receiving products in volumes lower than what was raised through purchase orders.
Market sentiments mixed: The sentiment across regions remained the same as in the previous week. One group of market participants still hold optimism about a potential increase in prices while the other group’s concerns increased with the early arrival of monsoons this year. Some optimistic distributors and end-buyers said it will be short-lived and prices should come under pressure as monsoon strengthens its grip.
Moreover, weakening of substrate product prices amid increasing challenges in the global trade market, and low in-house demand continue to weigh on domestic market sentiments.
Outlook
Trade-level prices are likely to come under pressure in the near term. Market participants in the domestic distribution network are cautious and are actively scanning the market for any hint or indication about the mills’ potential price announcement for June 2025.
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