Factors that are Putting Indian Flat Steel Prices under Pressure
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Major mills in India have kept the flat steel prices stable since last two consecutive months in the backdrop of bleak demand and slow movement of material in the domestic market.However prices in traders market witness marginal fluctuations over low sales.
This week, prices have again come down by INR 500/MT in traders market and currently trade reference prices (basic) for HRC (IS2062) 2.5 mm-8 mm are assessed in the range of INR 39,000/MT (ex-Delhi), INR 39,000/MT (ex-Chennai) and INR 38,500-39,000/MT (ex-Mumbai).The prices mentioned above are basic prices excluding GST @ 18%.
Below are the factors that may put pressure on Indian flat steel prices.
1.Sluggish domestic Demand- The major reason behind the consistency in flat steel prices is dull and weak demand prevailing in the domestic market.Domestic demand has not shown any major improvement since past few months resisting the Indian mills to revise the flat steel prices.According to provisional data released by JPC (Joint Plant Committee) nation's steel consumption has witnessed marginal rise of 1%,M-o-M basis and was recorded at 7.486 MnT in Oct'17 against 7.449 MnT in Sep'17. Traders compalined about low sales volumes since demand is not picking up in domestic market
2.Liquidity Crunch - Cash flow in the domestic market has lessened slightly resulting in less movement of cash among traders, stockiest and dealers..Traders and small enterprises are facing liquidity crunch resulting to lower sales volumes and unaltered prices in domestic market.
3.Falling export volumes by Indian steelmakers-As per Joint Plant Committee (Govt. of India) data India's finished steel exports decline significantly by 31% M-o-M basis to 0.77 MnT in Oct'17 against 1.11 MnT in Sep'17. Also,Indian exporters have not booked enough material for December deliveries which will result in fall in export volumes in that month.
Also,global flat steel market has also witnessed the down trend amid weak buying activity among overseas buyers.Chinese HRC export offers showed the decline of USD 10/MT to USD 550-555/MT FoB China which was USD 560/MT FoB basis a month ago.However Indian HRC export offers are now assessed at USD 540-545/MT,FoB India, declined by USD 20/MT against USD 560-565/MT ,FoB basis in Oct'17.
| Particulars | Current Prices | 1 Month Back | 3 Month Back |
| Chinese HRC Export Offers (in USD/MT) | 550-555 | 560/MT | 565 |
| Indian HRC Prices (Ex-Mumbai in INR/MT) | 38,500-39,000 | 38,000-39,000 | 38,500 |
| Indian CRC Prices (Ex-Mumbai in INR/MT) | 43,000 | 42,500 | 43,000 |
| Indian HRC Export offers (in USD/MT) | 540-545 | 560-565 | 590 |
Indian and Chinese export offers are on FoB basis
Source-SteelMint Research
