India: HRC trade-level prices remain firm w-o-w even as market waits for August price announcement

• HRC prices stay firm in key markets
  
  
• Buyers and sellers await price announcement by mills
  
  
• Buyers returning to market, but cautious
  
  
• Conversion to sales still a concern
  
  

Trade level prices of hot-rolled coil (HRC) remain largely rangebound this week as participants await August price announcement from mills. Prices have shown marginal changes in most markets.

Inquiries are coming at increased pace compared with the past couple of months, although they weakened a little in some markets this week, distribution network participants informed.

SteelMint's weekly benchmark price assessment continued hovering around similar levels as that of last week. Prices for HRC (IS2062, 2.5-8mm) stood at INR 59,000-60,000/t , while CRC (IS513 Gr O, 0.9mm) prices are at INR 67,500-68,500/t. Prices are exy-Mumbai, excluding GST at 18%.

What factors are impacting market sentiments?

a) SteelMint's India HRC export index declines continually: SteelMint's India HRC (SAE1006, boron added) export index was assessed at $600/t FOB east coast this week. The drop was $40/t against last week's $640/t FOB. The index has been on a continual decline since mid-Apr'22 with the assessment at $940/t FOB.

Cooling of buying interest in the overseas markets of Vietnam, UAE and Europe have remained a challenge for steel mills. Moreover, the levy of 15% export duty on non-alloyed steel products in May'22 dented the overseas trade volumes.

Also, piling up of inventories with mills amid slow demand in both domestic and overseas markets pulled the prices down on both the platforms. Post the duty announcement, domestic HRC price has dropped about 14% from INR 69,300/t assessed as on 18 May'22. Furthermore, the same has dropped about 17% from INR 72,500/t as on 4 May'22. The prices mentioned are on an exy-Mumbai basis, exclusive of GST @ 18%.

b) Inquiries improved but buyers are cautious: Steel manufacturers opting for maintenance shutdowns ahead of their normal schedule, pulled some of the buyers back to the market. The demand showed some improvement in the first half of the month compared with the past two months. "Buyers who were postponing their requirements since April, returned to market as prices dropped. However, they continue to remain cautious," shared a major distributor from western India.

"Increase in number of inquiries have provided a broader customer base for sellers in the market who have been trying not to reduce prices. This has provided a temporary stability to the prices," opined one of the major distributors from the northern India, adding buying interest has been better than other regions.

The cautious approach of buyers remains intact. Although they are coming up with requirements but still stand on a watch out for the price momentum. The anticipation of decline in prices is still rife amongst them, and they are awaiting the price announcement for August.

c) Some segments showing green shoots: Some industries are showcasing improved interest in procurement. Industrial end-users from solar, transmission and distributions, crash barriers, PEB, and fabrication are coming up with requirement for HRC, whereas automotive, panels, and furniture are posting requirements for CRC and other value-added flat steel products, shared mill sources.

Near term outlook: Prices have slowed their descent over the last few weeks. However, with the month-end approaching buyers and sellers are looking out for the price announcement from mills for August. A few market participants opine that the prices are likely to remain rangebound in the coming week. While a few still cling to the notion that prices are set to decline further but at a slower pace. The reason being declining trend in global prices and the news about HRC imports from Russia.