SteelMint: Indian HRC prices range-bound on sluggish demand

The trade reference prices of India's hot-rolled coils (HRC) have remained in a similar range as in the previous week in the key markets. A roll over in list prices by domestic mills for early-Jan'22 sales gave some boost to trades initially but activities slowed down this week compared to the previous week.

Factors weighing on market sentiments -

1. India's export offers largely stable:
India HRC (SAE1006) export index remained largely stable this week at $720/tonne (t) FOB east coast with a couple of deals reported to Nepal and Vietnam. Also, the other overseas markets are opening up with participants resuming activities after the holidays.

Trade activities remained slow in both the domestic and overseas markets, leading to a continual decline in export offers since early-Nov'21 when the index stood around $877/t FOB east coast, India.

2. Cost-effective imports from Japan, South Korea:
A continual decline in HRC export offers from Japan and South Korea made imported material cost-effective compared to domestically-produced HRCs. As per the current week assessment, HRC export offers from Japan and South Korea are down by $20/t w-o-w to $805/t CFR India. This translates to $830/t (INR 61,390/t) exy-Mumbai. Meanwhile, domestic market prices are still at INR 63,000-64,000/t ($852-865/t) exy-Mumbai.

Yet the possibilities of significant import bookings are low due to limited export allocations from South Korea and Japan amidst robust domestic demand there.

3. India's factory output at 9-month low in Nov 21:
India's Industrial Production (IIP) growth pulled back to 1.4% in Nov'21, hitting a nine-month low. The quick estimates of the index stood at 128.5. The manufacturing sector saw a mere 0.9% growth to 129.6, data from the Ministry of Statistics and Programme Implementation showed. Lingering virus concerns have dampened consumer sentiments. This adds to the already existing issues of elevated input costs and the raw material shortages. Factoring these developments, we expect IIP growth to remain sluggish in the range of 2-3% for the next three months.