India steel: HRC sales nearly grind to a halt

India's domestic hot-rolled coil (HRC) price fell this week as monsoon rains and a liquidity crunch curbed sales.

Mills are offering credit to encourage sales, providing a cushion for traders that are receiving delayed payments from consumers, including contractors for state-funded projects.

"I have not sold a single tonne of steel for the past three weeks," said a Mumbai-based trader.

The Argus-assessed price for HRC 3mm thickness fell by 500 rupees/t ($7/t) to Rs36,500/t ($509/t) ex-Mumbai this week.

Major integrated mills offered HRC at Rs37,000/t and were open to offering discounts, while some smaller mills in north and east India offered even lower at Rs36,500/t. But bids remained low at Rs36,000/t.

The Argus-assessed price for Indian HRC has now fallen by Rs4,250/t since the first week of June.

Offers for Indian SAE1006 HRC were heard lower this week, at around $460/t cfr Vietnam on Thursday. Last week's offers were at around $468-470/t. A deal for the SAE1006 grade was done at around $455-457/t cfr Vietnam this week. Lower domestic prices are prompting mills to offer more material in the Vietnam market as inventories increase.

The hardest hit sectors from India's economic slowdown have been automobile and real estate, the two major consumers of HRC and flat steel products in general. Large automakers, including India's biggest passenger vehicle manufacturer Maruti Suzuki, are suspending operations for a few days each month as sales have plummeted. The real estate market is also in the doldrums, with demand likely to remain flat or decline in the next six months, according to a recent survey of industry executives by consultancy Knight Frank.

The only prospect of a near-term recovery in consumer demand comes from the festival season, which started this month and runs until Diwali on 27 October. But the impact may be limited by pressure on farm incomes because of erratic monsoon rains that may have substantially reduced crop output.