Weekly: Indian steel market snapshot

Indian secondary steel market witnessed further fall in prices this week with mismatch in demand-supply as demand continued to remain subdued while supply improved.

As per SteelMint’s assessment, Indian semi-finished steel market has observed a fall in prices by around INR 1,500-2,500/t in sponge iron and INR 1,000-1,800/t in billet during the 6th week, with a major fall of INR 1,300-1,800/t was noticed in Southern region.

Also, finished long steel prices dropped by up to INR 3,000/t in many locations. Domestic HRC prices fell by up to INR 3,000/t due to rising inventories with traders and normalizing iron ore supplies.

Iron Ore and Pellet

• Odisha’s Essel Mining has today (6th Feb) cut iron ore lump offers by INR 600/t and that of fines by INR 500/t. Revised offer for fines (Fe 62%) stands at INR 5,775/t (ex-mines, including Royalty, DMF & NMET).
• OMC had scheduled iron ore e-auction on 1st Feb’21 for 933,000 t iron ore lumps. Entire quantity put to auction was booked. However, bids fell by up to INR 2,200/t against the last e-auction conducted on 2nd Dec’20.
• SAIL sold 700,000 t of iron ore through auctions in the merchant market in Jan’21 from its captive mines in Odisha and Chhattisgarh. No bids received in SAIL’s auction conducted on 4th Feb’21 for 124,000 t iron ore from its Dalli mines in Chhattisgarh. Out of the total quantity offered, 28,000 t was fines (Fe 55.28%) and the remaining 96,000 t was iron ore tailings (Fe 51.11%).
• SteelMint’s bi-weekly domestic pellet index “PELLEX” fell sharply by INR 500/t to INR 11,600/t, DAP Raipur. Raipur based pellet makers have lowered offers today by upto INR 800/t to INR 11,650-12,150/t (DAP, Raipur).
• SteelMint’s weekly pellet export index (FOB east coast India) has dropped sharply by $19/t w-o-w to $175/t just after hitting all-time high $196/t two week’s ago. Prices have hit 1.5 month low as per data maintained with SteelMint. Pellet export prices fell significantly owing to increased number of offers from India post budget announcement.

Coal

Australian premium low-volatile (PLV) hard coking coal (HCC) FoB price decreased marginally this week amid lower-priced offers available for ex-Chinese spot buyers. Trading activity has slowed down as buyers turned cautious amid uncertainty over near-term prices following a series of higher-priced deals concluded during the latter half of last month. China-based end-users and traders have been actively seeking reselling opportunities since prices recovered after hitting rock bottom in January.

• The Indian market is presently observing a steady resurgence in restocking demand for coking coal on the back of strong demand for steel and healthy production levels, coupled with a buoyant metallurgical coke market.
• Latest offers for the Premium HCC grade are assessed at around $155/t FOB Australia, $217.25/t CNF China and $169.10/t CNF India.

Ferrous Scrap

• Imported scrap market in India has observed limited trades since almost one and a half months. This week too market remained sluggish due to bearish sentiments in secondary steel segment. However, in a major boost to the industry, govt. has removed 2.5% import duty on ferrous scrap in the Union Budget FY’21-22.
• Currently, imported scrap trades in India are slow despite duty cut due to limited sales in secondary finished segment. Imported scrap has no buyer but surely people will come back soon, SteelMint learnt.
• HMS 1&2 (80:20) from Dubai is being quoted at $340-350/t CFR level, whereas buyers are asking at $330-335/t level.
• SteelMint’s assessment for containerised shredded stands at $403/t CFR Nhava Sheva level, registering a further drop of $20/t w-o-w. Notably, the prices have come down by around $70 in the last one month.

Ferro Alloys

• Indian silico manganese prices fell throughout the week owing to dull demand from the domestic market. Meanwhile, Durgapur registered a drastic fall amidst low demand from exports and are currently trading at INR 63,500-64,000/t exw Durgapur.
• Ferro manganese prices went down in Raipur and Durgapur, despite to moderate demand in the domestic market. The prices are downtrending amidst lowering steel prices and are currently at INR 66,000/t both in Raipur and Durgapur.
• Ferro chrome prices remained stable at INR 95,000/t in the week, due to tepid buying interest in the domestic market. Buyers are waiting for the Chinese New Year, as they expect the prices to fall as Chinese return after holidays. However, producers remain optimistic due to hampered production in China.
• Indian ferro silicon prices came down due to dull demand in the domestic market. Prices in Bhutan were revised twice in the week amidst downtrending stainless steel market and increased selling pressure on the producers.

Semi Finished

On a weekly basis, domestic sponge iron offers fall sharply by INR 1,500-2,500/t in major locations. Whereas billet prices also declined by upto INR 1,000/t across India except in the Southern India where it fell by INR 1,300-1,800/t with a major fall of INR 1,800/t in Hyderabad.

• Vedanta Limited has reduced its foundry grade pig iron offer by INR 2,200/t to INR 40,000/t FoR Ahmedabad.
• Tata Metaliks Ltd has again reduced its foundry grade pig iron price by INR 1,000/t ($14) to INR 37,000/t & basic grade (Si 1-1.5%) by approx INR 2,200/t ($30) to INR 33,300/t exw Kharagpur.
• Induction grade billet export offers to Nepal drop by $20/t this week to $460/t exw Durgapur (equivalent to $485/t CPT Nepal). Participants reported improved demand as few parcels sold in the last couple of days.
• Indian sponge iron export deals reported about 5,000-6,000 t at $340-345/t CPT Benapole (equivalent to $355-360/t CFR Chittagong, Bangladesh).
• Steel grade pig iron prices declined upto INR 2,700/t w-o-w, with sharp corrections of INR 2,000-2,700/t in Central India, followed by INR 700-1,500/t in Eastern & Northern regions. The prices fall on account of healthier supply & low demand due to drop in billet prices.

Finished Long

India’s finished long steel market via induction route observed a downtrend in this week as well, and region to region rebar manufacturers lowered their offers as per the market requirement. Likewise in the Northern region prices down around INR 600/t, in the Central and Eastern regions the same declined by INR 1,300-1,600/t. Coming to Western region where in Gujarat and Goa market rebar prices down up to INR 2,500/t, while in Mumbai market manufacturers kept their offers stable and given trade discounts as per buying interest. In Southern India at Chennai and Bangalore market prices fell sharply around INR 3,000/t. As per trade sources, higher inventories in mills and to maintain the price parity with other competitive markets, are also a major factors behind downfall in prices in overall locations.

• Trade reference rebar prices of 10-25 mm through midsized mills assessed at INR 36,800-37,200/t exw Raipur and INR 41,500-41,900/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers is stood at INR 700-1,000/t and trade reference price of 200 mm Angle is at INR 40,500-40,900/t exw Raipur.
• Trade discounts in Raipur wire rod are currently at INR 1,500/t and trade reference prices stood at INR 36,400-36,500/t exw Raipur and INR 36,800-37,200/t exw Durgapur, size 5.5 mm.

Finished Flat

India’s domestic HRC prices have fallen further this week on rising inventories with traders and normalizing iron ore supplies. SteelMint’s benchmark prices for 2.5 mm thickness HRC stands at INR 55,000-55,500/t exy Mumbai, down by INR 250/t w-o-w.

Factors behind the decline in domestic HRC prices:

• Traders are reluctant to procure material from mills at higher prices as they have sufficient inventories, SteelMint learned from market sources.
• Indian Govt. has reduced custom duty on steel imports to 7.5 % from 12.5%, in the recent Budget. This has dampened market sentiments as the end-users are expecting HRC imports from non-FTA countries to increase, especially China.

Outlook- Although some steel mills, to keep the momentum bullish, have raised list prices by up to INR 1,500/t on HRC and CRC. However, we feel this hike may not be absorbed owing to stagnant demand and lower trades/Also imports may not materialize as anticipated by the market.

Reference Prices as on 6 Feb’21 (Week 6)
Prices are exw & exclusive of GST

Indian export reference prices as on 6 Feb’21
Prices in $/t
Source: SteelMint Research