Domestic hot-rolled coil (HRC) prices in the trade segment continue with the downward trajectory in key markets as end-user demand remains sluggish.
SteelMint’s benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRC) stood at around INR 66,000-66,500/t (exy-Mumbai) as compared to INR 67,000-67,500/t seen a week ago. The prices mentioned above are exclusive of GST @18%.
SteelMint in conversation with trade channel partners learnt of the factors impacting domestic HRC prices:
1. Inventory pressure: The persistent weakness in end-user demand and push from manufacturers to lift materials have led to inventory build-up in the trade channel.
“Trade activity has remained low since the beginning of the month, while there is a constant push from mills as they too want the inventory to move out into the market. This has increased the level of inventory among the various partners in the trade channel, and also weighed on the sentiments in the trade segment,” a few reliable market participants in northern and southern India told SteelMint.
2. Iron ore prices have come down: Increased iron ore inventories with miners in India and limited buying interest amongst both domestic and overseas consumers have weighed on the prices lately. OMC’s previous auction did not get a good response, and this also has been a reason for the reluctance to buy at prevalent price levels. Participants are awaiting the next auction scheduled in the upcoming week.
SteelMint’s weekly Odisha iron ore fines (Fe 62%) index has moved down by around INR 400/t to INR 8,100/t (ex-mines, including royalty, DMF and NMET) as assessed on 21 Aug’21.
3. Falling global HRC prices weigh on buying interest: Domestic market participants are increasingly tracking changes in the global market. Decline in HRC offers from China and India on an FoB basis has kept buyers alert, leading to a decline in active trade in both domestic and overseas markets.
SteelMint’s India HRC (SAE1006) export index stood at $902/tonne (t) FoB east-coast basis as against the previous week’s $911/t FoB India.
On the other hand, the export offers for China’s HRC (SS400), stood at around $970-1,000/t FoB basis, contrasted against the previous week’s $1,000-1,020/t FoB.
What lies ahead?
Domestic market prices may remain under pressure for some time as per the current market scenario. Alongside this, the demand-supply gap is likely to persist with the uncertainty around China’s export tax announcement, the falling global trade offers and subdued buying interest in both the domestic and overseas markets.
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