Weekly: Indian steel market snapshot

Indian secondary steel market has noticed an upward trend in prices, however finished steel offers of primary players witnessed a decline on subdued demand.

As per SteelMint’s price assessment, the semi-finished market has observed a hike in prices by INR 800-1,750/t in sponge iron and INR 1,200-2,300/t in billet nationwide. Also, rebar prices increased by INR 600-2,000/t in major supplying locations.

However, the prices of finished steel, produced through primary mills, have dropped by INR 750/t in HRC & up to INR 2,000/t in rebars, w-o-w, due to sluggish demand and limited trade activities.

Iron Ore and Pellet

• SAIL e-auction conducted for 136,000 iron ore fines (Fe 62.5%) on 12th Feb from its Bolani mines in Odisha. The entire quantity auctioned received bids at INR 3,810-3,830/t (loaded into rakes and excluding royalty) against the base price at INR 3,500/t.
• On 11th Feb’21 auction from Chhattisgarh fetched only 28,000 t iron ore fines (Fe 60.21%) bids at INR 3,350/t (loaded into rakes including royalty).
• JSW Steel had scheduled an e-auction on 12th Feb for 300,000 t iron ore (Fe 55-58%) fines from Jajang mines remained unsold. Notably, the auctioned material was not allowed for exports.
• NMDC has lowered base price from Kumarswamy mines by around INR 550/t ($8) for both fines and lumps in upcoming (Feb’21) Karnataka iron ore e-auction.
• SteelMint’s bi-weekly domestic pellet index “PELLEX” remains stable at INR 11,550/t, DAP Raipur. Raipur based pellet makers continue to hold pellet offers stable at INR 11,650-12,150/t (DAP, Raipur) due to export bookings concluded recently.
• SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index increased sharply by around $10/t this week and is currently assessed at $95/t FoB east coast India. Index rose following hike in spot iron ore index this week on tighter supplies & hike in futures.
• SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has increased $7/t w-o-w to $182/t. Index has rebounded after it hit 1.5 month low last week.

Coal

Australian premium low-volatile hard coking coal FoB price plunged this week following a European steelmaker’s sell tender for a 75,000 t cargo with late-March laycan. Presently there is limited upside potential for spot prices of Australian premium coking coal due to the influx of lower-priced resale cargoes from China in the ex-Chinese market.

Seaborne coking coal spot market activity is expected to resume after both buyers and seller return to the Chinese market post Lunar New Year holidays. Eventually, however, limited spot availability amid firm demand from buyers in major ex-China markets, including India, should keep prices supported.

• Latest offers for the Premium HCC grade are assessed at around $139.00/t FOB Australia, $222.00/t CNF China and $154.20/t CNF India.

Ferrous Scrap

Imported scrap offers to India have rebounded this week, however, trades are yet to improve owing to the disparity between bid and offer. Buyers continue their wait-and-watch mood due to the high price volatility seen in domestic steel prices in the secondary segment.

• SteelMint’s assessment for containerised shredded stands at $430/t CFR Nhava Sheva level, increasing sharply by $25/t w-o-w.
• HMS 1&2 (80:20) from UK/EU is being quoted around $390-400/t CFR level, whereas same from UAE origin now stands at $360 levels. HMS 1 from UAE is being offered at $380-390/t CFR level.

Yards are not lowering the offers on expectations of price recovery. No firm trades apart from HMS trades from Dubai were heard this week, SteelMint understand.

Ferro Alloys

• Indian silico manganese prices increased towards the end of the week owing to supply constraints in the domestic market. Meanwhile, export demand is also high and market participants are expecting a price rise.
• Ferro manganese prices went up despite moderate demand in the domestic market. The prices are up amidst low supply and better inquiries for exports.
• Ferro chrome prices increased to INR 96,500/t due to supply shortage in the domestic market. The producers are now holding back sales as they believe that prices would shoot up after holidays owing to stringent electricity norms in China.
• Indian ferro silicon prices came down due to dull demand in the domestic market. Prices in Bhutan were revised to INR 94,000/t amidst downtrending stainless steel market and higher selling pressure on the producers.

Semi Finished

On a weekly basis, domestic sponge iron offers rise by INR 800-1,750/t in major locations. Similarly, billet prices also inclined by INR 1,200-2,300/t across India with a major increase of INR 2,300/t in Hyderabad.

• Vedanta Resources has concluded a tender for a rake (2,176 t) of foundry grade pig iron at around INR 33,200/t exw, (equivalent to INR 36,700-37,000/t FoR Delhi/Punjab).
• Tata Metaliks Ltd has again reduced its basic grade pig iron (Si 1-1.5%) prices by INR 1,300/t to INR 32,000/t exw Kharagpur. Meanwhile, foundry grade pig iron prices have remained unchanged at INR 37,000/t exw.
• Induction grade billet export offers to Nepal increased by $15-20/t this week to $480/t exw Durgapur (equivalent to $505/t CPT Nepal). Participants reported active demand this week.
• Indian sponge iron export offers increased to $360/t CPT Benapole (equivalent to $375/t CFR Chittagong, Bangladesh), however, demand slowdown on a sharp surge in offers, sources from Eastern India stated.
• Steel grade pig iron prices surged up to INR 2,000/t w-o-w, following gain in billet prices along with temporary supply shortage of pig iron in Eastern region as a couple of merchant suppliers concluded export deals recently.

Finished Long

India’s finish long steel market via induction route in this week shows upward price trend by INR 600-2,000/t w-o-w in the major markets, except in the South India (Chennai market) where marginal price correction has been observed. As per market participants, recovery in buying inquiries in the market along with price increased in semi-finished steel have pushed the manufacturers to increase their offer.

• Trade reference rebar prices of 10-25 mm through mid-sized mills assessed at INR 38,700-39,000/t exw Raipur, INR 43,000-43,400/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers is at INR 900-1,300/t and trade reference price of 200 mm Angle, is stood at INR 41,200-41,600/t exw Raipur.
• Trade discounts in Raipur wire rod are currently at INR 1,300-1,500/t and trade reference price stood at INR 38,000-38,200/t exw Raipur, INR 38,400-38,700 exw Durgapur, size 5.5 mm.

Finished Flat

India’s domestic HRC prices have fallen further this week on sluggish demand and limited trade activities happening in local market. Meanwhile, government initiatives to scrutinize the steep price hike along with a fall in iron ore prices has led to slump in trade prices.

SteelMint’s benchmark for 2.5mm thickness HRC stands at INR 54,000-55,000/t exy-Mumbai, down by INR 750/t as compared to last week.

“Domestic HRC prices continue to remain under pressure due to slow demand in the market. Dealers with immediate requirement are planning to procure material however they are reluctant to purchase at higher prices”, shared a major HRC distributor in Mumbai region

Reasons behind decline in prices- 

• India’s anti-trust regulator, Competition Commission of India (CCI) is investigating if steelmakers colluded to hike rates, which have shot up by more than 45% since Jun’20.
• Automobile dealers’ body FADA, in Jan’21 witnessed a y-o-y decline of 9.66% in overall sales across categories.

Reference Prices as on 13th Feb’21 (Week 7)
Prices are exw & exclusive of GST

Indian export reference prices as on 13th Feb’21Prices in $/t
Source: SteelMint Research