Lack of demand and strong rupee makes Indian Steel-mills introspect
October started with the forebodings of an auspicious beginning as Indian mills had hiked flat product prices by INR 1000 per tonne to INR 1500 per tonne. However the dream has been rudely shaken as the market failed to digest the hike. It is anticipated that producers will either reduce the prices in equal measure or at least roll over, faced with a Hobson’s choice.
The reduction could be in the range of INR 500 per tonne to INR 1000 per tonne as domestic off take fell short of their expectations in October.
The reasons for a premature soggy sentiment are as follows
1. Demand from the key consuming sectors viz., manufacturing and projects has lagged.
2. Falling international price levels (3%) since September fuelled by appreciation of Indian Rupees (5%) since September has added fuel to fire making imports cheaper.
3. Liquidation of imported material at cheaper rates has put pressure on domestic levels Imported cargo is being offered at about INR 30500 per tonne basic, compared to the mills’ offers of INR 33000 tonne has is a discomforting.
The pall of gloom has been enlarged with the ominous proposition of imports hitting the Indian shores after a month as booking has already commenced, since international levels have receded by almost USD 20 per tonne to INR 25 per tonne in the last 6 weeks. So far this month, domestic traders have already placed orders for about 200,000 tonnes of imported coils.