The recent market trends in global industry are set to generate ripples in domestic steel market of India. It is certain that a directional movement is on the offing since supply and demand factor reached the brink after an impulse over last couple of months. The tariff of flat steel products has shown week on week improvement over the previous one month by US$40 per ton.
Currently, hot rolled coil is offered at US$545 per ton CFR SS400 grade 3mm to 12mm width from China and US$550 per ton CFR with 2mm base manufactured by Arcelor Mittal. Various underlying factors include low availability of HRC from China; Ukrainian manufacturers are busy till 2010 in fulfilling their orders in an attempt to cover demand during hiatus and post holiday period. Strengthening of Russian current against US Dollar forced manufacturers to hike their offers. Prices of iron ore and coke in spot markets firmed up during previous two weeks. Freight markets also strengthened recently.
Domestic steel market was slightly affected by gyrations. However, it showed some activity toward the end of last week. Steel companies are busy in brinkmanship in order to liquidate burgeoning inventory level by means of offering quantity based discount. Experts have said that majority of manufacturers are getting high level of unmitigated stock. This has lead them to cut down on production or offered discounts resulting in further decline in their profit. Trading companies hope that the price reduction shall take place as HRC related business activity is still low.
The deterioration in business activity intensified further with month on month arrival of large import volume at much lower price level. It has been observed that approximately 150,000 tons of HRC from October 2009 booking was finalized at US$490 per ton to US$510 per ton CNF Mumbai level.
The market activity in the case of CRC has improved with consistent import reaching 80,000 tons in October only at the price level of US$620 per ton CNF from CIS countries. Currently, offers are hovering around US$650 per ton CNF Mumbai. Market situation does not look auspicious in the days to come primarily due to massive stocks in the system neutralizing all efforts aimed at improving market sentiment. A sustained improvement after winter holidays in international market shall hold domestic prices as well.