India steel: HRC prices slide on slow buying

India's domestic hot-rolled coil (HRC) were lower this week on the back of sluggish demand and a pessimistic short-term outlook.

Monsoon rains continued to hinder trade and transport activity slowing steel purchases by the construction sector.

Demand from automobiles and consumer durables sectors were also weak. Vehicle sales in August fell by 23.5pc from a year earlier, the steepest on-year fall since 1998. Several automobile companies are cutting production. Automobile sales have been falling for a year because of a liquidity crunch and confusion over emissions standards for vehicles from 2020.

The Argus assessed price for HRC 3mm thickness dropped by 500 rupees/tonne ($7/t) to Rs36,000/t ($506/t) ex-Mumbai over the past week.

The main integrated mills were offering HRC at Rs36,500/t and open to offering discounts, while some smaller mills in north and east India were offering even lower at Rs36,000/t. But bids remain low at Rs35,500/t.

The Argus-assessed price for Indian HRC has dropped by Rs4,500/t since the first week of June.

Indian mills turned their attention to exports to tide over the lull in domestic demand. prices, said the sales executive at a Mumbai-based mill.

Strongly competitive offers by Indian mills emerged this week in European markets at €430/t cif Italy while lower priced deals were done in Vietnam. A deal emerged this week for 30,000t of SS400 grade, Indian HRC at $455/t cfr Vietnam for October shipment. Another deal emerged this week for 20,000t of S355JR grade at $470/t cfr Vietnam and SAE1006 grade at $495/t for October shipment.

Domestic HRC prices are likely to remain pressured in the coming weeks as demand has continued to fall despite the festival season that started earlier this month with the Ganpati festival in west India. The festival season will end in late October as Diwali is celebrated on 27 October. Market participants are hoping for strong festive season consumer demand and a post-harvest bump in rural spending to reverse falling sales of automobiles and consumer durables, which in turn could lift steel sales.