Will Indian Mills Cut Domestic HRC Prices in May?

Dull trades, ongoing elections and cost effective imports have kept domestic HRC prices under pressure in India. SteelMint's trade reference prices in major markets like Mumbai and Delhi have come down to 1-month low.

SteelMint in talk with major Indian steel mills learned that sentiments are still bearish in domestic market, which may put prices under pressure in near term. Some mills indicated that mills may plan for a cut, while others mentioned chances of roll over in offers for the month of May.

Domestic HRC prices may remain under pressure due to following reasons-

1.Landed cost of HRC cheaper than domestic prices- As Steelmint earlier reported that, Indian based stockists have concluded a deal of HRC (Pipe-making and other grade of higher thickness) of quantity 20,000 MT in the range of USD 570/MT CFR basis for May shipments.

Thus landed cost of HRC is assessed around INR 41,500/MT (ex-Mumbai).On the other side, domestic HRC prices in Mumbai region is hovering around INR 42,000/MT (ex-Mumbai). All prices mentioned above are basic and extra GST @18% is applicable.

Meanwhile Iran also exported around 3 bulk HRC vessels to India during Mar'19.Thus few trade sources shared that imported HRC from Iran is cost effective which results to domestic HRC under pressure.

2.Sluggish trades in domestic market - Traders in domestic market reported weak buying interest and dull bookings happening in domestic market.Inquiries are very less and sales volumes reported decline due to ongoing general assembly elections.Major projects are on hold amid absence of proper funds amid elections.

Meanwhile auto sales also reported decline due to weakening market sentiments, higher insurance premiums and hike in fuel prices.

3. Falling prices in traders market- Indian steel mills hike domestic HRC prices in the beginning of the month by INR 500/MT which was difficult to absorb in domestic market over lackluster demand.On an average basis domestic HRC prices (IS2062, 2.5-8MM) is around INR 42,000/MT (ex-Mumbai) which was INR 42,500-43,000/MT (ex-Mumbai) in beginning of the month.Thus traders are expecting discounts and rebates to push buying.

In the month of April, Indian steel mills had raised domestic HRC prices by INR 500/MT following hike in imported HRC offers and decent export bookings in the month of March.