India: Market awaits mills' May'23 price announcement; trade-level HRC prices range-bound

Trade-level hot-rolled coil (HRC) prices have stayed range-bound in the key markets of Mumbai and Faridabad. Cautious buyers, and softening global HRC prices have slowed down market activities, resulting in prices remaining stable. Moreover, participants are now looking forward to the mills' list price announcement for May 2023 sales.

SteelMint's benchmark assessment for HRCs (IS2062, Gr E250, 2.5-8mm) stood at around INR 59,500-60,500/t ($726-738/t) exy-Mumbai as on 25 April 2023. CRC (IS513 Gr O, 0.9mm) prices were assessed at INR 63,500-64,500/t ($774-787/t) exy-Mumbai. Prices have been hovering at this level for the seventh week in a row, as per SteelMint records. Above prices were exclusive of GST at 18%. (INR 1 = USD 0.0121968 ; USD 1 = INR 81.9889)

Factors keeping trade-level prices under pressure-

1. Subdued overseas market pulls down export offers: Slow overseas market has weighed on HRC export offers from India. This turns out to a major reason for cautious buying in the domestic market. SteelMint's India HRC (SAE1006) export index dropped by $10/t to $685/t FOB east coast India as on 25 April.

Cheaper alternatives and then the festive month of Ramadan had kept buyers mostly away due to higher Indian offers which were hovering around $720-730/t CFR UAE.

Buying interest in Vietnam has also slowed, resulting in reduced prices from the domestic mills. Vietnamese steel major Formosa Ha Tinh (FHS) announced prices for HRC (SAE1006, skin passed) at $692/t CIF Ho Chi Minh City (HCMC) for May and early June sales earlier this month. Now, the mill is offering discounts to the tune of $40/t over the announced price.

Chinese HRC (SS400) export offers dropped steeply by $50/t w-o-w to $615/t FOB Rizhao as of yesterday.

2. Inclination towards imports: Indian buyers have started showing more interest in imports lately. Last week, some unconfirmed Japanese-origin HRC import deals, with volumes aggregating to 20,000-30,000 t, were heard booked at $695-700/t CFR India. Recently, a deal for Vietnamese-origin HRCs is being heard under negotiation for around $680/t CFR India to be delivered in end-May or early June. The landed cost would roughly amount to INR 57,300/t in Mumbai while the domestic market price is still trending higher.

3. Sluggish demand in the traders' market: Demand from the end-user industrial buyers continues to remain slow. Participants opined that the current price levels are still high and non-workable.

"Procurement volumes are low at present in the traders' market as buyers are purchasing as per their urgent requirements rather than maintaining stocks," informed a west-based distributor source. Buyers are looking for material with low price levels than those of the mills' list prices, said another source.

Near-term outlook: Declining global export offers and imports turning lucrative are likely to impact the domestic price levels in India. Thus, it is anticipated that trade market prices shall come under pressure in the near term. Furthermore, trade participants are awaiting the list price announcement from mills' which is expected to be announced in early May.