Indian HRC trade prices recorded further fall since the market is quiet and bearish due to sluggish trade. Traders are expecting a further fall in prices, thus delaying their purchases in the market.
SteelMint’s prices for the benchmark 2.5mm hot-rolled coils (HRCs) stand at INR 64,000-65,000/t (exy-Mumbai), showing a decline of INR 500-1000/t w-o-w against INR 64,500-65,500/t (exy-Mumbai) seen last week. The prices mentioned above do not include GST @18%.
Domestic HRC trade prices fall further due to the following factors:
1.SteelMint HRC FoB index drops steeply by $30/t: SteelMint’s HRC FoB India index fell to $882/t FoB, showing a decline of $30/t w-o-w. Indian steel mills have booked HRCs for exports at $915/t CFR Vietnam while for Turkey the levels were around $945-950/t CFR basis. Offers to the UAE stood at $960-970/t CFR against $980-990/t CFR basis at the beginning of this month. Thus, lower export realisations resulted in further correction in domestic prices.
2.Trade market remained quite: Dealers and distributors are holding decent levels of inventories and are postponing their restocking activities in anticipation of further fall in prices in the coming weeks “Major HRC distributors are currently holding 10-15 days of inventory and if this starts easing out, then demand is expected to rebound in the regional market,” said a major distributor in the Mumbai region. Meanwhile, a few trade sources said: “Liquidity issues continue to weigh on buying interest.”
3.Consumer durable sector sees softness in demand: Consumer durable manufacturers witnessed slow sales and low offtake in the Apr-Jun quarter due to the second wave of Covid. “The month of May was the worst hit in terms of sales of consumer durables such as air-conditioners,” SteelMint learned from market reports.
Will domestic HRC prices correct further?
On the other hand, prices may not correct further due to the following reasons:
1. JSW’s Vijayanagar steel plant undergoes a maintenance run- JSW Steel, will go for a 75-day maintenance shutdown of the steel melting shop (SMS) at its flagship Vijayanagar works, beginning 15 Jul’21. The “planned” move will stretch over three periods of 25 days’ of shutdowns punctuated by two 10-day “cooling off” periods. The total shutdown will thus continue till almost end-Sept – so in total 75 days.
Importantly, the shutdown will lead to more than 2.50 lakh tonnes of production getting impacted with 3,500 tonnes per day of output loss to be incurred.
2. Indian mills concludes HRC export deal at increased prices yesterday: An Indian steel mill is heard to have booked 50,000 t of HRCs for export at $920-925/t CFR Vietnam yesterday. The deal prices are up by about $5-10/t against the previous booking made at a $915-920/t CFR basis. Thus, it is anticipated that the export offers might rise in the upcoming weeks.
3. Chinese futures on uptrend: Rise in HRC prices comes on the back of recent hike in Chinese steel futures. According to data maintained with SteelMint, the Shanghai Futures Exchange (SHFE) HRC futures Oct’21 contract, on 15 Jul’21, closed at RMB 5,962/t ($922/t) up by RMB 212/t w-o-w.
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