Indian importers are asking for a $20 per tonne reduction in offers of commercial-grade hot rolled coil (HRC) as a weakening rupee-dollar exchange rate has resulted in fewer transactions, market participants told Metal Bulletin.
Offers for HRC imports into India, mainly of Chinese origin, are currently at $660-665 per tonne cfr Mumbai for shipment in June.
Offers from Iran are in the same range for commercial-grade material, while Iranian cold rolling-grade coil has been offered at $680-685 per tonne cfr Mumbai for end of June/early July shipment.
Market participants have pointed to the weakening of the rupee as the major reason for not booking imports at these price levels.
The rupee has depreciated to Rs52.50 to the dollar. It touched a low of Rs53 to the dollar last week.
Cost of imports
“Currently, these offers are not viable because the rupee has depreciated. The cost of imports will be more than the cost of domestically available material,” a Mumbai-based importer said.
“The rupee has depreciated by about 4-5% so offers for HRC will also have to come down. We are asking for at least a $20-25 [per tonne] reduction in cfr prices,” the importer said.
HRC from China will cost importers around Rs43,000 ($803) per tonne after paying taxes and duties at current rupee/dollar rates, while domestic prices for similar material are Rs42,250-42,500 per tonne inclusive of tax, which leaves no room for profits, the importer said.
The rupee has also become too volatile for importers to take a call on imports.
A lot will also depend on how Indian mills respond in May to the current market situation, another importer said.
“If mills here increase HRC prices by Rs1,000-1,500 [$18.66-28] per tonne, we can certainly reconsider the offers. The local price of HRC also has to increase,” the second importer said.
The domestic HRC market has already shown signs of weakness over the past couple of weeks, which is another reason why no coil is being booked, market participants said.
A second participant said that since the rainy season will start in June, consumption of HRC will fall, further damping prices of the commodity. All the current offers are for shipments in June-July.