Activity in the steel trade market has slowed down to a trickle with buyers refraining from stocking on material on expectations of prices going down, said traders and industry executives.
The trade market involves dealers and sub-dealers of primary steel mills like Tata Steel and JSW Steel and they sell material to end-user industries. It is estimated to account for a quarter of the overall steel consumption in the country.
The trade market is already operating below the listed price of primary steel mills and there are expectations that the mills themselves will be marking down their prices in line with international prices of the alloy.
JSW Steel has cut down its list price for benchmark hot-rolled coil (HRC) steel for May by Rs 2,000 per tonne compared to April to Rs 59,750, data from SteelMint show. ArcelorMittal Nippon Steel India (AMNS India) has cut it by Rs 2,500 per tonne to Rs 60,000. Other major p ..
“But what happens in steel is because of the cyclicality, there's sentiment driven demand. When the steel price is going up, people will buy more than they need and if they feel the price is going to go down, they'll buy less than they need,” he said.
The ongoing price cuts follow a hike in list price by steel mills in April. There was little acceptance for the higher price in the trade market, industry watchers said. In fact, the lower takeoff in the trade market was one of the reasons for inventory to accumulate with mills, prompting the price cuts.
“Everyone is cautious as no one knows where the bottom is,” the Mumbai-based dealer quoted above said.
Meanwhile, imported steel has become available at prices undercutting that of domestic mills, further prompting the price cut. Imported HRC is available in the market at Rs 56,000-57,000 per tonne, market watchers said.