India: Trade-level HRC prices edge up by up to INR 300/t w-o-w amid supply constraints

Trade-level hot rolled coil (HRC) prices edged up in the markets under assessment this week. The increase was a meagre INR 100-300/t ($1-4/t) depending on the market assessed. However, the price ranges (minimum and maximum) were identical to those of the preceding week. A major private mill announced an interim increase in list prices of HRCs and cold rolled coils (CRCs) effective 17 July. This made distributors raise their quotes in the traders' market. However, buyers continued to procure on a hand-to-mouth basis, keeping the trade volumes low.

SteelMint's benchmark assessment (bi-weekly) for HRC (IS2062, Gr E250, 2.5-8mm) edged up by INR 300/t ($4/t) against last week's levels. The prices were identical at INR 55,000-56,000/t ($670-682/t) as on 18 July, against the last assessments done on 11 July and 14 July. Similarly, CRC (IS513, Gr O, 0.9mm) prices also inched up by INR 300/t ($4/t) but maintained the levels at INR 59,000-60,000/t ($719-731/t) in this period.

It may be mentioned that though the price range was identical w-o-w, the maximum offers received last week were in the range of INR 55,000-55,500/t. In the current week, the maximum offers received hovered in the slightly higher band of INR 55,500- 56,000/t. Hence, the average increased.

Market updates:

1. Slow sales in domestic spot market; supply constraints: Trade market participants have been troubled by the slow sales in the spot market for the last couple of months. There has been an increase in inquiries since the beginning of July. However, the volumes per inquiry are less amid the need-based procurement pattern of buyers, highlighted a few sources. Moreover, seeing the seasonally slow sales period of the monsoons, mills have started scheduling maintenance downtimes. This has led to restricted supplies in the market. A major private player's hot strip mill (HSM) commenced its maintenance on 19 July and the unit will be out for the next 8 days, as reported a week back.

Market sentiments stand mixed amid the tussle between supply constraints and low-volume purchases in the spot market. However, a slight improvement in export offers this week can lend support to the trade-level prices in the near term, opined some of the industry participants. Moreover, there have been no fresh HRC import bookings heard, which is also a supporting factor.

2. Majority of Indian mills hold back HRC, CRC export offers on lower allocations: Indian steel mills have held back offers to the EU, the Middle East (ME), and Vietnam yet again. The European market is somewhat sluggish due to summer maintenance but demand from the automotive industry is supportive. In addition, Indian mills were not actively offering in the export market amid maintenance shutdowns. However, it is expected that mills are planning to open fresh offers with a hike.

Meanwhile, HRC export offers to Nepal rose by $15-20/t to $635-640/t CFR Raxaul border. Moreover, despite volatility in Chinese SHFE HRC futures, the export offers for SS400 have increased by $5/t w-o-w to $555/t FOB Rizhao this week.

3. Bulk import volumes (provisional) in July: Bulk HRC and plate import volumes in July 2023 (till 19 July) have stood close to the levels seen in June. HRCs and plates imported in July stand at around 277,784 t while the total volumes booked in June were 287,703 t as per the vessel line-up data maintained with SteelMint. However, since the landed cost of imports for the material arriving in July is close to the current domestic prices, these are not likely to put the latter under pressure, opined sources.