Indian steel prices have been witnessing increase since 3rd quarter of FY18. Indian HRC prices have increased by around INR 4,000/MT (USD 63) and Rebar prices by around INR 4,800/MT (USD 76) in last one month.
Looking deeper we find that a confluence of factors is playing out in driving Indian Steel prices.
1. Closure of some large Iron ore mines in Odisha – Five working iron ore mines Mesco Steel, Serajuddin & Company, government-owned IDCOL and National Enterprises in Odisha have gone out of operations as they failed to pay out the penalties, as per deadline was given by honorable Supreme Court till 31st Dec’17. Estimated loss from these mines is expected to be in the range of 15-20 MnT iron ore annually. Following this, other major merchant miners namely – Rungta Mines, KJS Ahluwalia have raised iron ore prices upto INR 500/MT with effect from yesterday.
2. Higher Coking Coal prices – To cater to the incremental demand, import of Coking Coal has risen further in the country, and as domestic supply of the Coal is inadequate.
Premium HCC demand has been substantially strong in line with aggressive imports by steel makers in India, Japan and with supply getting tighter, the coal prices have jumped upwards from the onset of Nov’17. At the same time, concerns of any possible supply disruption to occur during the rainy season, from late Dec’17 in Australia, also have added fuel to the fire to the importing spree among the steel makers.
Driven by robust demand, prices of the Premium HCC have reached around USD 262.25/MT FoB Australia in the last week of Dec’17.
3. Increased steel exports – According to data released by Joint Plant Committee (JPC) India’s finished steel exports have increased to 5.99 MnT during Apr-Nov’17 against 3.88 MnT in the same time frame last year, up 54% Y-o-Y. High global prices, improved demand from SE Asian nations and fall in Chinese steel exports have given room for Indian steel exports.
4. Improved domestic demand – According to customs data, Indian steel consumption increased by 5% during April’17-Nov’17 stood at 52.1 MnT against 49.45 MnT in the same period previous year (April’16-Nov’16) owing to better export realization.
5. Lower steel imports – According to customs data maintained with SteelMint, Indian steel imports have been recorded at 6 MnT during Jan-Nov’17 compared to 6.08 MnT in the same time frame last year. Indian flat steel imports have fallen to 5.63 MnT during Jan-Nov’17 against 5.68 MnT during Jan-Nov’16. Measures like anti-dumping, safeguard, cost effective domestic prices resisted steel imports to India.
Scrap imports to India have also come down. According to customs data maintained with SteelMint, India imported 3.6 MnT ferrous scrap during Jan-Sept’17 compared to 4.3 MnT in the same time period last year. Amid high offers and comparatively cheaper domestic scrap, Indian mills have reduced imports.
6. Falling steel exports from China: Environmental concerns have led to lower steel production in China, with a positive impact on demand for Indian Steel. China, has slashed steel capacity by 50 million metric tons this year in efforts to tackle pollution and curb excess supply. Less Chinese supply globally and decent demand mean healthy export margins for India’s steel sector as a whole.
Indian Iron & Steel reference prices as on 2nd Jan 2018
| Particular/Grade | Prices | 1-Week ago | 1-Month ago |
| Iron ore, ex-Mines Odisha (5-18 mm, Fe 62%)* | 5,800 | 5,300 | 4,500 |
| Australian Coking Coal, CNF India (Premium HCC)# | 263 | 242 | 200 |
| Sponge, produced through Pellets, ex-Raipur (FeM 80) | 21,400 | 21,000 | 18,500 |
| Billet Induction grade, Ex-Mumbai (100*100 mm) | 35,000 | 34,200 | 29,800 |
| HRC, Ex-Mumbai (2.5MM-8MM, IS2062) | 42,500 | 40,000 | 38,500 |
| Rebar, Ex-Mumbai (IS 1786, Fe 415/500) | 38,300 | 37,500 | 33,500 |
Prices ex-mill & excluding 18% GST.
*Inclusive of Royalty, DMF & NMET. GST @ 5% extra
#Prices in USD/MT
Indian steel prices are largely supported by higher exports, expensive raw materials and lower imports. With Chinese mills likely to get back to their optimum operating levels (currently operating at 50%) from mid March 2018, availability will increase in global market and may put pressure on prices. Chinese government has made tax adjustments on exports of steel (especially longs), with an intention to increase exports.
We do not see Indian steel prices to fall in short term. But it will be interesting to see how market behaves when Chinese mills start taking fresh export orders for April loading for which bookings will start by Feb end or March beginning.
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