This week Indian HRC trade prices declined sharply by INR 1,500-2,000/t since traders are delaying their procurements in expectation of further correction in HRC prices. SteelMint’s benchmark prices for 2.5mm hot-rolled coils (HRC) stand at INR 64,500-65,500/t (exy-Mumbai) this week against INR 66,000-67,000/t (exy-Mumbai) seen last week. The prices mentioned above do not include GST @18%
Prices continue to remain under pressure due to various factors
1.Indian mills are offering rebates to push up buying: AM/NS India has slashed prices by around INR 2,000/t and offering HRCs at around INR 68,400-68,500/t (exy-Mumbai). SAIL is offering rebates of around INR 2000/t for July deliveries. Tata BSL is offering rebates of around INR 2,400/t for July deliveries. Mills are trying to attract buyers by providing price support to traders to escalate buying. Meanwhile, limited export orders to traditional export destinations and subdued domestic demand pushed mills to correct prices. “Mills are providing price support to kick start domestic demand post-second wave of Covid so that buyers can return to the market,” major Indian steel mills indicated to SteelMint.
2.Fall in global HRC offers: Indian mills are offering HRC to Vietnam at $940/t CFR this week, which was around $990-1,000/t CFR a couple of days back. Offers to the UAE are heard at $ 990-1,000/t CFR basis against around $1,030-1,040/t last week. Vietnamese buyers are less likely to procure from India because of a recent deal of around 90,000 t by Russian mills over 3-4 days. Meanwhile Indian mills have exhausted their yearly quotas to Europe. Thus, mills will shift their focus to domestic sales over exports.
3.Wide disparity between trade and mill prices: SteelMint’s benchmark prices for 2.5mm hot-rolled coils (HRCs) stand at INR 66,000-67,000/t (exy-Mumbai).The prices mentioned do not include GST at 18%. Meanwhile, the list price of HRC now stands at INR 68,000/t and despite corrections there is a gap of INR 1,000-2,000/t between the trade and mill prices. Despite offering rebates, mill prices are higher as compared to trade prices which may lead to further correction in prices.
4.Arrival of monsoon: Due to the arrival of the monsoon season, trade remained sluggish due to limited inquiries. Usually, steel prices continue to remain bearish in this season due to dull demand. Also, a long pause in construction activities and weakening demand from the consumer durables and auto sectors are expected to impact prices.
Will domestic HRC prices continue to remain under pressure?
Domestic HRC prices are expected to correct further in line with global prices. Also, due to limited export orders, mills are planning to divert sales domestically. Thus, higher inventory levels among mills and sluggish demand in the domestic market may result in a further fall in trade prices in the near term.
Leave a Reply