India: HRC trade prices fall after hitting all time high

The domestic HRC trade prices, which had hit an all-time high last week of INR 72,000-73,000/tonne (t) ($962-975/t), declined this week due to the temporary lull in market activities ahead of the Diwali festival.

SteelMint's benchmark trade reference price assessment for hot-rolled coils (HRCs) (IS 2062, 2.5-8 mm) stands at around INR 71,000-72,000/t ($949-962) (exy-Mumbai), down by INR 900/t ($12). However, CRC (IS 513 Gr O, 0.9mm) prices remain range-bound at INR 75,500-76,000/t (exy-Mumbai), unchanged for the third consecutive week. The prices mentioned are exclusive of GST @18%.

What led to the decline in prices?

1. Slowdown in restocking demand: Market activities have started to slow down with lesser number of participants active as the festive days are coming closer. Restocking demand has also lost sheen as most participants now have decent booked levels, while there is low end-user demand.

2. Downstream industries see sales deferred: Demand from end-user industries continues to remain slow as buyers are postponing their purchases seeing the elevated market prices. For instance, in automobiles, Rajesh Menon, Director General, Society of Indian Automobile Manufacturers (SIAM), while commenting on Q2 and H1 FY'-22 sales, said: "On the sales front, barring the Covid period, H1 sales of passenger vehicles are still below 2016-17 levels, that of two-wheelers are below 2011-12 levels, that of commercial vehicles are below 2010-11 levels and that of three-wheelers are still below 2000-01 levels."

3. Factory output woes: Manufacturing-based units are reeling under the pressure of disruptions in coal supplies and elevated prices of coking coal, denting steel demand. The focus on delivering coal to power generation units has posed challenges to the manufacturing sector as well.

Furthermore, the semiconductor shortage has set up hurdles in automobile and white goods manufacturing lately. In Sept'21, the production level of automobiles (including passenger vehicles, three- and two-wheelers, and quadricycles) stood at around 2,125,304 units, down by 18.89% against the corresponding period last year (CPLY)

Outlook
SteelMint understands from market sources that Indian mills are likely to increase the list prices of HRCs and CRCs for Nov'21 deliveries although trade channels feel the market may find it tough to absorb another steep price hike.