India: Trade-level HRC prices remain range-bound amid limited trade, influx of imports

Hot-rolled coil (HRC) prices remained range-bound, establishing a range between INR 52,900-56,600/t ($642-679/t). Cold-rolled (CR) coil prices exhibited a degree of stability, maintaining a range of INR 58,500-63,400/t ($703-762/t) across markets. The current state of the traders' market reflects persistent sluggishness in trading activity, largely attributable to diminished demand.

BigMint's benchmark assessment (bi-weekly) for HRC (2.5-8mm, IS2062, Gr E-250 Br.) prices increased by INR 100/t ($6/t) at INR 54,000/t ($648/t) on 11 June 2024, compared to the previous week. However, CRC (0.90mm, IS 513, CR1) prices went down by INR 200/t ($4/t) at INR 60,600/t ($728/t) during the same period. These prices are quoted ex-Mumbai, excluding 18% GST, and are for cut-to-length (CTL) deliveries. (INR 1 = USD 0.0120188 ; USD 1 = INR 83.203)

Market updates

1. Market facing low demand: The traders' market is experiencing persistent sluggishness due to subdued demand. However, the CRC market is facing the additional challenge of supply constraints.

End-users are exhibiting discerning purchasing behaviour, prioritising cost-effectiveness in their acquisitions. Despite the conclusion of elections, domestic demand remains tepid, showing no notable surge. Factors such as the onset of the monsoon season, heightened import activity, and anticipation surrounding forthcoming budget announcements contribute to the prevailing market dynamics.

"Market sentiment is depressed due to margin pressure and the need to aggressively pursue new orders," said a market participant. "Reports of increased import orders and a potential influx of imports are further dampening market spirits."

2. Export and import trends: India's imports of bulk HRC and plates have begun to grow out pacing the exports as per vessel line-up data maintained with BigMint.

Import bookings have significantly increased in the past two months, with new participation from Benxi joining established players like JFE, Hyundai, and Formosa.

Mumbai Port activity:

June Arrivals: 40,000 t (30,000 JFE, 10,000 Hyundai)

July/August Arrivals:

• Benxi (China): 125,000 t (trade: 75,000 t, tubes/OEM: 50,000 t) - Booking price: $555/t + duty + INR 1,000 clearing.
  
  
• Vietnam: 90,000 tons (mainly 1079 grade) - Booking price: $595 (duty-free), Landed cost: INR 51,000-51,500.Vietnam: 90,000 t (mainly 1079 grade) - Booking price: $595 (duty-free), Landed cost: INR 51,000-51,500.
  
  

Chennai Port

• Hyundai offers HRC for July shipment at $608/ton to Chennai Chennai Port Activity: Similar to Mumbai, Chennai has seen a rise in import bookings, particularly from Formosa and Hyundai, driven by tube maker activity.
  
  
• Hyundai offers HRC for July shipment at $608/ton to Chennai
  
  

Indian exports of hot-rolled coils (HRC) to Southeast Asia and the Middle East have stalled due to competitive pricing from China and a softening global market. Chinese HRC export offers to the Middle East have declined in response to a steep drop in Shanghai Futures Exchange (SHFE) HRC futures. Similarly, Japanese offerings in the region are at comparable levels, with a limited number of transactions reported.

In the European market, a reliable source indicates a shift in buyer preference towards domestically produced HRC due to aggressive pricing by local mills.

Outlook

The onset of the monsoon season is expected to dampen demand across India. This, coupled with shrinking profit margins in the trading sector, is contributing to negative market sentiment. Additionally, the influx of imports is likely to exert further downward pressure on prices. Hence the market is expected to remain range-bound.