India: HRC trade prices rangebound amid lacklustre demand

Trade reference prices of hot-rolled coil (HRC) and cold-rolled coil (CRC) are rangebound as against the previous assessment by SteelMint. The decline in HRC export offers and anticipation of further softening of domestic trade market prices have kept buyers on the sidelines.

SteelMint's benchmark assessment for HRC (IS 2062, Gr E250, 2.5-8mm) stood at INR 58,500-59,500/t ($712-785/t) exy-Mumbai on 9 May, 2023, unchanged for the third week in a row. CRC prices were assessed at INR 62,500-63,500/t ($761-773/t) exy-Mumbai. Prices exclude GST at 18%. (INR 1 = USD 0.0121789 ; USD 1 = INR 82.1091)

Factors impacting prices:

1. Weakening global HRC prices: Offers for HRC have been on the decline. For instance, Chinese HRC (SS400) export offers dropped $35/t to $580/t FOB Rizhao as against $615/t on 2 May. Volatile Chinese SHFE futures, soft domestic demand and increased competition in the exports market led to the decline.

SteelMint's India HRC (SAE1006) export index dropped to $597/t FOB east coast this week. This is a major factor keeping Indian buyers cautious about bulk procurement.

2. Imports turn lucrative: Imported HRC is attracting Indian buyers. Last week a deal for Chinese-origin HRC was concluded at $620/t CFR India, for delivery in end-May or early June, SteelMint learned from sources. However, the volume could not be ascertained. The landed cost of HRC imports is around INR 56,200/t ($689/t) exy-Mumbai.

Cargoes from Japan have been previously booked at around $700/t CFR at the beginning of April, which was followed by a deal closed at $665/t CFR with a Vietnamese mill towards end-April.

3. Need-based procurement in domestic market: Indian buyers have been sourcing material on an urgent need basis for over two months now. "Last time the market demand was at a decent level from mid-January to mid-February when the distributors and other industrial buyers were active," said a north India-based source.

"Demand started waning in the traders' market in early March as buyers turned cautious about price levels and avoided bulk purchases," said a major distributor source. Towards end-April imports started turning lucrative amid Japanese and Vietnamese mills reducing their offers, he added.

Near-term outlook: Trade reference prices are likely to remain under pressure in the near term. Price-competitive imported HRC and need-based procurement patterns adopted by end-industrial buyers shall remain major concerns for Indian trade market participants.