India: PSUs cut HRC, CRC prices; private mills may follow suit

Major public sector units (PSUs) have reduced the list prices of hot rolled coils (HRCs) and cold rolled coils (CRCs) by approximately INR 1,000-2,000/tonne (t) ($12-24/t) m-o-m, effective 1 September 2024. Sources suggest that some prominent private mills might also lower their prices by INR 1,000-1,500/t or maintain current prices; however, confirmation from these mills is still pending.

Current list prices for HRCs (2.5-8 mm, IS2062, Gr E250, Br.) stood at INR 50,000-51,000/t ($596-607/t) ex-Mumbai, while for CRCs (0.9 mm, IS513 CR1), prices hovered at around INR 55,500-57,500/t ($661-685/t). These prices exclude GST of 18%.

What drove mills to reduce list prices?

Increased imports: As per BigMint's vessel line-up data, the cumulative import volume for August 2024 touched 627,426 t. It was 636,651 t in July, and an additional 331,092 t are expected to arrive in the first half of September.

Surplus in domestic market: Supplies of HRCs remained high in the domestic market amid increasing preference for cheaper import alternatives and need-based procurement. The market is sitting on ample supplies of domestically produced and imported HRCs.

"Given the current market surplus of HRCs and declining demand, there is a downward pressure on prices," stated a market participant. "There are speculations that steel mills may consider increasing prices once the government implements anti-dumping duties or raises import tariffs," they added.

Weak export market: India's export volumes have declined due to competitive pricing from other exporting countries (China, Vietnam, Japan, and South Korea). Exports to Southeast Asia (SEA), the Middle East (ME), and the European Union (EU) have decreased amid lacklustre demand.

Weekly price update

BigMint's benchmark assessment (bi-weekly) for HRC (IS2062, Gr E250, 2.5-8mm) prices inched down by INR 1,000/t ($12/t) to INR 49,000/t ($584/t) on 3 September 2024 compared to the previous week. Additionally, CRC (IS513, Gr O, 0.9mm) prices fell by INR 900/t ($11/t) to INR 56,400/t ($672/t) during the same period. The prices quoted are ex-Mumbai, excluding 18% GST, and were for cut-to-length (CTL) deliveries (INR 1 = USD 0.0119116; USD 1 = INR 83.952).

Outlook

The increase in imports, coupled with higher domestic production, has led to elevated inventory levels. With demand continuing to decline, prices are expected to remain under pressure. The market is anticipating clarity on anti-dumping duties and import tariffs, which could provide some stability.