India steel: Trading firms unwilling to stock up HRC

India's domestic hot-rolled coil (HRC) prices dropped further this week as weaker consumption led trading firms to reduce inventories.

The Argus-assessed price for HRC 3mm thickness ex-Mumbai fell this week by 500 rupees/tonne ($7/t) over the past week to Rs37,000/t ($520/t).

The main integrated steel mills were offering HRC at Rs37,000/t, while certain smaller mills in north and east India were offering even lower at Rs36,500/t. But bids remained even lower at Rs36,000/t.

"I am not buying from mills any more, only buying small quantities from traders," said a Delhi-based buyer.

Trading firms do not want to stock up on inventories because of weak demand and are only buying for immediate sales.

Steel demand continues to be weak because of poor consumer spending on construction, automobiles and consumer durables during the monsoon months of June-September. There are expectations that the festive season next month may induce consumer spending, although there are doubts if this will happen as liquidity remains tight in the economy.

Some Indian mills may start focusing on exports given weak domestic demand, especially after the EU proposed that any one country can only supply up to a maximum of 30pc of overall EU HRC imports. This is likely to increase Indian HRC exports to the EU, as currently only 12.8pc of total EU imports are from India. Tata Steel, JSW Steel and Essar Steel are the main HRC exporters in India.

Indian exports remain competitive in Vietnam. A Mumbai-based mill sold 50,000t of SAE1006 re-rolling grade HRC at $478/t cfr Vietnam for September shipment. Another trade for 4,000t of similar material was done at $477/t cfr Vietnam for September shipment.