India steel: HRC keeps falling on liquidity crunch

India's domestic hot-rolled coil (HRC) prices fell further this week as a lack of liquidity in the financial sector hit local demand.

Demand has fallen for downstream industries such as automobiles, real estate and infrastructure.

The Argus-assessed price for HRC ex-Mumbai fell by 500 rupees/t from last week to Rs38,000/t ($552/t). The price has now dropped by over 6pc since the first week of June.

Major HRC producers cut their ex-mill offers this week. Mills in India's western states offered at Rs38,500/t, while mills in the north and east offered at Rs37,500/t. Bids were at Rs37,000/t.

"Buyers are cash-strapped and negotiating hard on every single trade," said a Chennai-based trader. Mills and traders are offering heavy discounts to make sales to consumers.

Banks have reduced lending to consumers and companies as they grapple with a large pile of bad debt that has led to a liquidity crunch. Delhi has promised to spend up to $10bn in the next three years to shore up bank capital, but there does not appear to be much prospect of any short-term boost in liquidity.

Some mills are holding on to offer prices amid market chatter that additional import duties may be applied on certain steel imports. Steel demand is not forecast to recover at least until the monsoon season ends in September. Construction activity in India typically dips during the June-September monsoon.