Indian Steel Industry Performance: H1 CY18 Vs H1 CY17

Indian Steel Industry performance was cheerful during the Jan-June (H1) of 2018 over strong domestic demand. The prices of all commodities rose sharply and margins (conversion spread) also stood healthier during the H1, 2018 as compared to Jan-Jun (H1) of 2017.

As per the assessment during the H1 of 2018 prices of all Semi-finished and Finished steel commodities moved up sharply in the range of 19 to 32% owing to govt. backed infrastructure projects. Flat steel – HRC & CRC prices increased about 4-8% as against prices of H1 2017.

— The price hike in key raw material – Iron ore & Pellets was about 25-32% (INR 500-1,500 or USD 7-22). Domestic iron ore prices moved up after few Odisha major mines were suspended from operations over late penalty payment over illegal mining. Similarly sharp surge being assessed in imported met coke prices by 26% (USD 76 or INR 5,250/MT) & Coking coal by 15% (USD 29 or INR 2,000/MT).

— Prices of Semis (Sponge iron, Pig iron & MS Billets) & Finish Long steel (Re-bars, Wire Rod & Structure) steel products rose by 26-30% (INR 4,500-9,500/MT or USD 65-138).

— In context Finish Flat Steel – HRC & CRC, the major producers gained prices near about 4-8% (INR 2,100-3,300/MT or USD 30-48). Steel mills had raised flat steel prices owing to good demand from auto mobile sector and less supply owing to maintenance shut-down at few works.

The margins (conversion spread) of steel mills who produces steel through EA or Induction furnace route was quite healthier. Also, the Large mills making steel in Blast furnaces reported strong margins for the year or quarter ended during Mar-June 2018.

On an average the standalone Induction furnaces who produced Billets to melt Sponge P-DRI have required average conversion of near about INR 12,000-12,500/MT which were rose to INR 15,000-17,000/MT during May-Jun’18. Similarly good margins being reported, who produced steel through large share of Scrap melting about 60-80%.

As the margins was high, the steel makers both – large & medium/small scale have raised their productions from 50-70% to 100% utilizations, also a large share of manufacturers have extended their rolling & melting capacities, as reported by sources.

Note: The above price & data changes are mentioned – H1 2018 Vs H1 2017.

Indian Iron & Steel Prices  of H1 2017 & 2018

Source: SteelMint Research

Statistics

— The data also shows surge in India’s crude steel production by 6.55% to 52.9 MnT in H1 2018 as compared to same period last year at 49.65 MnT. All key Indian mills – JSW Steel, Tata Steel and JSPL increased their output.

— Indian iron ore and pellet exports dropped 40%. Iron ore exports during Apr-June were adversely impacted owing to imposition of Goa iron ore mining ban and nil exports from NMDC amid lack in clarity over export duty under LTA.

— Indian Sponge iron exports increased in H1 2018, Bangladesh is the major buyer of Indian Sponge iron and growing melting capacities in Bangladesh have led to surge in Indian exports.

— Indian Billet exports declined near about 16% over significant surge in Indian domestic billet prices during H1 2018, this has kept buyers away for major bookings and resulting slight fall in exports. Nepal is the major buyer of Indian billets and due to seasonal slow down in the country, the re-rollers there lower billet purchases in past 2-3 months.

— Indian pig iron exports slump down by 70% due to less demand globally and also due to absent of India’s major exporter – Neelachal Ispat (NINL) due to company’s blast furnace capital repair works.

— Indian Finish long steel exports increased in H1 2018. The rise in exports attributes less supply from China over production curtailment.

— Flat Steel exports from India plunged down by 40% as mills preferred domestic sales owing to high prices.

Indian Export & Import

*till May figures
Source: SteelMint Stats, Custom