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Indian HRC stays lofty amid increasing buyer resistance

Wednesday, 21 October 2020

Spot prices of hot-rolled coil in India’s domestic market held steady at a 19-week high on Oct. 21, as steelmakers kept offer levels high amid an impasse with most buyers, who said they have not been able to pass on higher prices downstream.

S&P Global Platts assessed IS2062, 2.5-10 mm thick HRC, delivered to Mumbai at Rupees 42,500/mt ($577/mt), unchanged on the week. The assessment excludes GST of 18%.

Deals continued to be at the level of Rupees 42,000-42,500/mt for 4-10 mm thick material, with plate sold at Rupees 39,500/mt delivered to Mumbai, a distributor said.

A number of mills have lifted their offers to Rupees 43,000/mt, although these were subject to some discounts, depending on the customer. “They’re not doing price negotiations and not giving cargoes,” said a distributor in northern India.

Market participants expected steelmakers to continue to raise prices in November, although they said this would depend on sales of finished goods during the current festive season in the country, and in November, when the major Diwali festival traditionally gives a boost to consumption.

“Domestic demand was crippled over the last three to four months, and from August onwards people started buying, so the auto sector’s getting back to production,” a Mumbai-based distributor said. “The sales during the festive seasons -- everything will depend on this. Otherwise, there will be a big fall [in prices].”

Others noted that the stance of Indian mills would depend on the situation in international markets, and that if there were to be a price correction in the coming weeks, then the mills would be more amenable to lowering offers.

“We’re just waiting for that,” the northern Indian distributor said. “Once the international market slows down then we feel that the mills will negotiate with us.”

Given the run-up in domestic prices, the prospects of imports have not become much more viable because of a lack of options and high prices.

Japan’s Nippon Steel is no longer exporting to India following its venture with ArcelorMittal, and material from South Korea’s Hyundai Steel therefore seemed the remaining viable option.

While a shipment of South Korean coil is scheduled to arrive in India in December, buyers expected it to be sold at market prices rather than at the likely lower level at which it was sold, when prices dipped in September.

Separately, a number of deals were reported done for coated sheet from Vietnam’s Hoa Sen Group, although they were not expected to impact the Indian market due to limited volumes.

-- Keith Tan

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