Domestic HRC Prices May Rebound After Witnessing an Initial Correction Post Lock-Down Eases
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After the lockdown is lifted, Indian domestic HRC prices may see some correction by INR 1000-2000/MT for a short span of time. However after resumption of trades, prices may bounce back from the corrected levels, said by Mr. Nikunj Turakhia in a recent podcast with SteelMint. Mr Turakhia is MD at Standard Group & President of Steel Users Federation of India and Honourable General secretary of chamber of Association of Maharashtra Industry and Trade.
Other major key takeaways of the podcast are as follows:
1.Foresee dent in Indian steel demand initially- Steel demand from the real estate and automobiles sector have seen a tremendous slowdown before COVID-19 came into picture. Going forward, he shared that Indian steel mills will gradually lift the shutdown however Indian steel demand is anticipated to decline by atleast 15-20% in the near term.
2.Resumption of laborers back to work will be the major challenge-The end user industry is facing hard times and few of them have also come to standstill. Thus, it will be a tough challenge to convince the laborers and workers to resume back to work amid the threat of COVID-19, especially the users segment.
3.Demand recovery expected in Q4 -Indian steel demand is expected to remain subdued and may be by 4th quarter of this year we may see some recovery in demand.
4.Indian mills exploring export option to clear inventories - Indian mills are exploring export opportunities and are actively exporting HRC primarily to Vietnam and other countries. Also Indian steel mills have reduced their output to 40-50%. Thus mills have taken the right decision to lower output. The Government has allowed continuous processes to operate, but haven't allowed downstream industries to resume their activities which lead to mounting of inventories. However, at trader levels and end users' segment, inventories are not that high.
5.Indian HRC export offers have rebounded after bottoming out - Indian HRC export offers bottomed out after Russian and Ukrainian steel mills started to export HRC at cheaper offers mainly to Vietnam and Chinese market. However Indian mills have increased their offers and are recovering. Meanwhile besides this, China is actively booking pellets, slabs, and Billets.
6.Don't see any scope of HRC imports to India - India majorly imports HRC from South Korea. And with already MIP imposed on imports from South Korean mills like Hyundai, the landed price doesn't seems workable as exchange rate also remains volatile. Also, other exporters like Nippon Steel might not interested in export HRC to India after AM/NS coming to India. And Chinese mills seem as of now interested for buying HRC rather than exporting.
7.Incentive on steel exports should be provided- Indian govt should give some incentives in steel export so that Indian domestic sector should be stabilized, which is very crucial at this point of time.
