Competitive HRC Import Deals May Further Weigh On Domestic Flat Steel Market

Characterized by sluggish demand and declining prices, the domestic Flat Steel market in India faced significant challenges during May 2023. Both HRC and CRC prices experienced downward momentum, resulting from imbalanced supply and demand dynamics. Furthermore, the global Steel market’s dullness posed additional hurdles for domestic Flat Steel manufacturers. Let’s examine the factors contributing to the market’s current state and a short-term outlook for the industry in depth. Here we go!

Factors Affecting The Market

• Resuming Imports

The domestic Flat Steel market is impacted by the continuous decline in HRC prices on the international front which created an opportunity for imports. Some Indian buyers have recently concluded HRC import deals in the range of $578-591/ton (Rs. 47,800-48,900/ton) on a CFR basis. In contrast, major mills in the domestic market are currently offering HRC at around Rs. 57,000-58,000/ton. This price difference presents a challenge for domestic Flat Steel makers, as assessed by Ofbusiness.

• Weak Demand & Plunging Price

Due to weak demand the Flat Products prices plunged by around Rs. 2,000-3,500/ton on a month-on-month basis throughout May 2023. However, on a weekly basis, HRC and CRC prices remained mostly stable, with minor changes of Rs. 200-500/ton observed in Delhi NCR and Kolkata. Speaking of prices, here are the current offers:

• HRC Prices:
  • Ex-NCR/Delhi: Rs. 58,500/ton
  • Ex-Mumbai: Rs. 57,500/ton
  • Ex-Chennai: Rs. 61,000/ton

• CRC Prices:
  • Ex-NCR/Delhi: Rs. 62,500/ton
  • Ex-Mumbai: Rs. 63,500/ton
  • Ex-Chennai: Rs. 65,000/ton 

Market Outlook

• Anticipated HRC Price Decline

Looking ahead, HRC prices are expected to decline further in the coming weeks. The market faces pressures from an imbalanced supply and demand, as existing stocks are yet to be substantially digested and there is room for production to increase. These factors indicate that the short-term outlook for HRC remains bleak.

• CRC Prices Downward Momentum

CRC prices are also expected to witness a downward trend. Despite the mills’ high production levels, they may face challenges in receiving new orders in early June 2023. Additionally, the manufacturing industry’s demand for cold coils is projected to remain flat during this period. These factors contribute to the expected CRC price decline.

OFB’s Insight

The domestic Flat Steel market in India is currently facing significant challenges due to weak demand, declining prices, and global market conditions. Sluggish HRC sales may force mills to opt for production and price cuts in June 2023 as inventory accumulates. Additionally, the scope for imports in the domestic market becoming a major concern for local manufacturers. The short-term outlook for Flat Steel appears bleak, and industry stakeholders need to navigate these challenges to regain stability and growth in the coming months.

Read more: Indian Wire Rod Industry Faces Margin Pressure, Will It Affect Plant Operations?

For real time commodity prices, latest news, and insights, please download the all NEW and all FREE OfBusiness APP