India steel: HRC sentiment turns bullish

India's domestic hot-rolled coil (HRC) prices were stable this week as few trades were done, although market participants said prices may rise in the near future thanks to bullish sentiment following the re-election of the BJP-led government.

The BJP's election victory has reassured markets that the government will maintain its focus on building physical infrastructure, a key part of its agenda that has been the primary driver of steel consumption over the past few years.

HRC offers by three major integrated mills based in Delhi and Mumbai were heard at 41,000 rupees/t, although the best bids were at around Rs40,500/t. The Argus-assessed price for HRC ex-Mumbai was unchanged from last week at Rs40,750/t ($585/t).

Traders and distributors had built inventories this week in expectation of a price increase following the announcement of election results.

Traders will first try to liquidate existing stocks before making any fresh purchases, a Mumbai-based trader said. Demand is likely to increase next week, after markets remained sluggish over the past few weeks as consumers put off purchases amid the political uncertainty.

More investments and increased consumer spending are expected as the government takes office, which will be positive for steel demand, said the manager of a Mumbai-based steel mill.

Investors are likely to become more confident now the new government is in place, boosting cash flow in the economy and resulting in increased consumer spending, a Mumbai mill executive said.

The April-June quarter is typically the peak season for steel demand as construction activity picks up ahead of the onset of the monsoon. This year's monsoon is forecast to reach India by 6 June and cover the entire country by mid-July.

The government is expected to speed up infrastructure projects in the next couple of quarters, boosting steel demand. Land acquisition approvals may be sped up, given the new government's majority in parliament, said the manager of a state-run mill.