India: Domestic HRC trade-level prices fall on bleak demand

Domestic hot-rolled coil (HRC) prices in the trade segment witnessed a further decline by INR 500-1,000/t this week. SteelMint's benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRCs) stood at around INR 66,000-67,000/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 analyses that the domestic HRC market remained subdued due to:

1. Decent inventory among traders and distributors: Traders and distributors are holding enough inventory in hand owing to low sales. This in turn is keeping domestic HRC prices under pressure. Consumers are delaying their purchases in anticipation of a further decline in prices.

"Buyers in the retail segment along with a few downstream industries have postponed their purchases in response to the price hike earlier this month. Also, there is more pressure to sell with mills trying to push inventories in the trade segment," said a major distributor from southern India.

2. Limited exports: Indian mills have kept their HRC export offers largely stable against the previous week due to dull demand in Vietnam and Turkey. UAE-based importers have completed one round of bookings, and exhausted quotas to Europe have led to dull exports from India. Countries in South East Asia are concerned over rising Covid cases. For instance, the Vietnamese government is mulling an extension of the lockdown till mid-Sept'21. Thus, there were no major export deals concluded by mills in the last 10-15 days putting more pressure on mills to sell in the domestic market.

3. Mills offering rebates: Major steel mills are providing rebates on HRC of around INR 1,500-2,000/t to escalate buying in the domestic market. Meanwhile, bearish international markets and uncertainty on China's export tax are leading to bearish sentiments in the domestic market too.

What's ahead?
To summarise the market scenario, prices are likely to remain under pressure in the short term owing to dull demand in both domestic and export markets. Furthermore, the market has been unable to absorb the hike announced early in August. Mills may provide price support to push buying.