Hot-rolled (HR) plate prices in the domestic market continued their downward trend for the second week in a row as a result of sluggish demand from the end-user industry. Prices have come down by INR 1,000-1,500/tonne (t) w-o-w.
For week 35 (23-28 Aug’21), SteelMint’s assessment for benchmark HR-plates (IS 2062/E250, 5-10 mm) stands at around INR 65,000-66,000/t exy-Mumbai. Prices mentioned above are exclusive of GST @18%.
Why are prices declining?
1. Low buying interest: Major plate consuming sectors like construction, infrastructure and original equipment manufacturers (OEMs) have delayed their purchases owing to higher prices.
For instance, hot-rolled (HR) plate prices climbed up to INR 66,500-67,000/t levels in mid-Aug’21 which were around INR 65,000-66,000/t towards end-Jul’21. The rise in prices was primarily due to restocking activity, however, this subsided as there was minimal demand from end-users.
2. Persistent liquidity issue: Delay in payments during the pandemic has also been one of the barriers in the industry.
“Payments are blocked at various levels in the trade channels. This has also weighed on the buying cycle in the industry,” a western India-based trader said.
3. Decent inventory level in market channels: A few major distributors voiced their concerns regarding low downstream demand, while there is pressure on them to lift material from the mills as per the agreements. MoU holders, too, have to honour their contracts which has led to a piling up of inventories in the trade channel.
China’s heavy plate export offers drop
Resurgence in Covid-19 cases besides continued air of uncertainty around the export tax imposition has led to a decline in plate offers by Chinese mills. This has also resulted in low buying interest from the traditional markets of South America and others in the overseas market.
This week, offers were seen ranging between $915-925/t FoB China, down $20-25/t compared with $935-950/t FoB a week ago.
What lies ahead?
On one hand, steel manufacturers have been looking for an increase in consumption in the second half (H2), while on the other hand, buying interest is yet to show any sign of improvement. The monsoon season is nearing its end which has kept the mills optimistic about a rebound in demand. However, rising concerns on the next wave of Covid, rising cases and extension of related restrictions in a few provinces continue to weigh on buyers’ intent to procure.
Thus, it is likely that market prices will remain under pressure in the coming few weeks. However, keeping in mind such mixed sentiments, major mills are still contemplating on whether to raise or roll over their list prices for the upcoming month.
Leave a Reply