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India: Trade-level HRC prices remain range-bound w-o-w amid liquidity crunch

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BigMint Bureau

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19 Dec 2024, 17:18 IST

India: Trade-level HRC prices remain range-bound w-o-w amid liquidity crunch

Market facing high inventory, liquidity crunch

Imports contract to their lowest point this fiscal

India's trade-level prices of hot-rolled coils (HRCs) and cold-rolled coils (CRCs) remained stable this week across regions. Prices of HRCs ranged from INR 46,700-48,700/t ($549-573/t and for CRCs, at INR 53,200-58,500/t ($625-688/t). Market activity was subdued due to high inventory levels and an ongoing liquidity crunch.

BigMint's benchmark assessments (bi-weekly) for HRCs (IS2062, Gr E250, 2.5-8 mm/ CTL) dropped a nominal INR 400/t ($5/t) to INR 46,700/t ($549/t) as on on 18 December 2024. Similarly, CRC (IS513, Gr O, 0.9 mm / CTL) prices dropped by INR 200 ($2/t) t0 INR 53,400/t ($628/t). These prices are quoted exy-Mumbai, and exclude 18% GST.

Market updates

Limited demand, credit recovery major concerns: Demand in the traders' market remained subdued, with buyers meeting their immediate needs through credit purchases. Numerous distributors across markets expressed concerns over sluggish sales and the growing pressure to liquidate inventory at reduced prices in order to generate cash flow.

"As the quarter comes to a close, there is growing concern in the market over the high inventory levels and the associated costs of holding the same. Credit recovery remains slow, with nearly all new sales being made on credit. We anticipate prices to remain range bound and no steep recovery is anticipated," said a market participant.

Inventory piles up amid imports: Market inventory levels remain high. Imports that were previously blocked at ports have now been cleared and have entered the trade market, further inflating the inventory levels already present within the system.

However, imports of bulk HRCs and plates have declined to their lowest level in this financial year to 1,92,824 t till 16 December 2024, as per the bulk vessel line-up data maintained with BigMint. Further, it is expected that around 1,59,004 t will be imported by the month end.

Indian HRC export offers to the Middle East experienced a decline of $5-10/t this week to $540/t CFR UAE, following the conclusion of a 25,000-tonne deal for January 2025 shipment. Indian HRC export offers to Europe maintained stability at $590-595/tonne CFR Antwerp ($540-545/t FOB, east coast India) for S275, 3 mm material. Nevertheless, European buyers remain apprehensive regarding the procurement of Indian-origin HRCs, citing concerns surrounding the ongoing anti-dumping investigation and extended lead times.

Outlook

Given the challenges of liquidity, weak demand, and high inventories, a near-term recovery in trade-level prices appears unlikely. Inventory liquidation will remain difficult until buying activity improves in the traders' market. As a result, prices are expected to remain range-bound in the short term.