India steel: Higher export prices support HRC

Indian hot-rolled coil (HRC) prices increased by 1,500 rupees/t ($21/t) from a week earlier, as steel mills experienced higher prices in export markets.

The Argus weekly HRC assessment was at Rs35,500/t ex-Mumbai. Offers by the main integrated mills were at Rs35,750-36,000/t, while bids remained at Rs35,000/t.

Mills are HRC raising prices, despite weak domestic demand, because they are currently earning better margins in export markets, said a Mumbai-based trader.

Indian export offers for SAE grade HRC were at $485-500/t cfr Vietnam this week, while trading firms with cargoes on hand were willing to receive orders at $478-480/t cfr Vietnam.

Domestic demand remains sluggish from key consumers such as the construction and auto sectors. A continuing liquidity crunch in the economy has resulted in lower consumer spending and weaker investment in construction and infrastructure projects.

"I am still waiting for payments for trades concluded in August," said a Chennai-based trader. Cash-strapped contractors for construction work have held back payments for steel purchases, as they themselves have a substantial backlog in payments from government and private entities.

Traders do not expect prices to remain high for long if domestic demand does not recover. Argus-assessed prices of rebar and coated prices have fallen this week on the back of sluggish demand.