Regional prices of HRC and CRC reported a sharp decline by around INR 1,500-3,000/t ($20-41) due to sluggish demand and stalled purchases in the domestic market.
SteelMint’s trade reference prices are mentioned below:
- HRC (IS2062 2.5-8mm) stood at INR 55,000-56,000/t (exy- Mumbai), INR 53,000- 54,000/t (exy-Delhi), and INR 57,000-58,000/t (exy- Chennai).
- CRC (0.9 mm GR) is around INR 67,000-68,000/t (exy-Mumbai), INR 62,500- 67,000/t (exy-Delhi), and INR 67,000- 71,000/t (exy-Chennai).
- Prices do not include GST @18%
Factors behind steep fall in prices:
1.Traders are hesitant to procure material at higher prices-
Market participants shared with SteelMint that traders are reluctant to purchase material at higher prices since they have enough inventories at the moment. OEM’s have also held their purchases and are expecting further fall in HRC prices. “Around 25% of demand is reduced in the market since people are now holding stocks and waiting for clear direction in prices”
2.No premium between mill price and trade price-
The premium between the mill price and trade prices is very low due to which trader’s profit margin is affected. Mill price was around INR 55,000-56,500/t (exy-Mumbai) and the market price was around INR 55,000-56,000/t (exy- Mumbai).Thus, traders have kept themselves on the side lines and are waiting for a further downside in prices
3.Softness in the international market-
Chinese mills continued to reduce their export offers for the second consecutive week. The current week’s offers are assessed at $620-630/t FoB China, declining from $640-650/t FoB a week back. Nation’s HRC export offers are expected to decline further before the Lunar New Year Holidays beginning from 11th Feb. Thus, bearish sentiments globally have impacted domestic HRC prices since traders expect further fall in prices.
4.The 2nd price hike didn’t get absorbed in the market-
SteelMint learned from its market participants that the second hike announced by major steel mills didn’t get absorbed in the trader’s market. In the mid of Jan’20, few major steel mills announced the second hike of around INR 2000/t on supply constraints.
What may happen-
Major steel mills are planning to increase domestic flat steel prices by around INR 1000-1500/t in the near term to maintain the momentum. However, traders are expecting further fall on bearish trade sentiments. It will be interesting to watch how the market reacts to the price hike announcement by major steel mills
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