Weekly: Indian steel market snapshot

Indian secondary steel market has observed price rally during the week, however, a slight fall in prices was noticed in finished flats.

As per SteelMint’s price assessment, the semi-finished prices increased by INR 2,700-3,600/t in billet and INR 1,700-2,500/t in sponge iron due to active demand and production cuts in Raipur in addition to healthy orders among producers. Also, rebar prices moved up by INR 1,700-3,500/t in many locations.

In context to finished flats, domestic HRC prices continued to fall this week on stagnant demand and rising inventories with traders.

Iron Ore and Pellet

• Two more auctioned iron ore mining leases – Guali and Jiling Langalota which have been allotted to OMC commenced production. The two mines in Keonjhar district are targeted to produce 12 mn t of iron ore annually.
• India’s largest iron ore miner – NMDC has restarted operations from its Donimalai iron ore mine, the company said in its recent BSE filing. It resumed operations after obtaining a lease extension for 20 years w.e.f. 03 Nov’18 from Govt. of Karnataka and completing the associated statutory requirements.
• SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index is assessed this week at $92/t FoB east coast India, down by $3 w-o-w. Export price has fallen on the back of a sharp hike in vessel freight rates, sources have reported to SteelMint.
• India’s pellet export index has risen backed by the anticipation of strong Chinese buying after the holidays end. SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has increased by $2/t w-o-w to $184/t.
• SteelMint’s bi-weekly domestic pellet index ” PELLEX ” has increased marginally by INR 50/t to INR 11,600/t, DAP Raipur in recent trades.

Coal

Australian premium low-volatile (PLV) hard coking coal (HCC) FoB price has remained steady over the past week, as both sellers and buyers retreated to the sidelines in exw China markets. Overall market fundamentals remain generally negative with thin buying interest, as buyers turned cautious amid uncertainties over the near-term demand outlook.

Seaborne coking coal delivered prices to India surged due to strong demand from Indian steel mills coupled with weather-related supply concerns in Australia alongside notably higher shipping freight rates in the Asia-Pacific Panamax route. The Indian market has lately been 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 $138.00/t FOB Australia, $223.50/t CNF China and $160.50/t CNF India.

Ferrous Scrap

Imported scrap offers have continued to move up further for yet another week in India. However, trades have slowed down, in anticipation of a hike in prices after the CNY holidays and hike in container freight.

• SteelMint’s assessment for containerised shredded of UK/US origin stands at $452/t CFR Nhava Sheva level, increasing sharply by $25/t against end of last week.
• Shredded is being offered at around $450-460/t CFR Nhava Sheva level, up by $20 w-o-w.
• HMS 1&2 (80:20) from UK/EU is being quoted around $400-415/t CFR level, whereas same from UAE origin now stands at $410-412/t levels.
• HMS 1 from UAE is being offered at $415-425/t CFR level.

Ferro Alloys

• Silico Manganese prices increased due to high demand and lower inventory of silico manganese with steel producers. There is supply shrinkage in the domestic market as most producers are either catering to government orders or exports in line with better international prices.
• Ferro Manganese prices increased amidst bullish steel market sentiments. Meanwhile, there is only a handful of ferro manganese producers active in the domestic market. Current offers are at INR 70000/t (HC 70%) on Exw basis.
• Indian ferro chrome prices increased amidst the supply shortage in the domestic market. Meanwhile, good response in Vedanta auctions also helped to set the benchmark prices. However, few producers with liquidity crunch are also short selling in the market.
• Prices rebounded for ferro silicon in Bhutan to INR 98,000/t as Chinese production cost has increased amidst higher electricity prices. Producers in Guwahati are also offering at the same prices as most of them are booked for the month, while few are also waiting for the upcoming government auction.

Semi Finished

Indian semi finished steel prices increase sharply, the domestic billet prices have gained by INR 2,700-3,600/t & sponge iron by INR 1,700-2,500/t. The prices surge on account of active demand as well healthy orders among producers, meanwhile in the Central region lessened sponge iron productions has led to a significant surge in prices.

• SAIL has scheduled an auction for 10,650 t basic grade pig iron on 24 Feb ’21 from its Bhilai Steel Plant, Chhattisgarh.
• Tata Metaliks Ltd has raised its foundry grade pig iron price by INR 1,700/t ($23) to INR 38,700/t ($534), however its basic grade (Si 1-1.5%) pig iron price remained unchanged at INR 33,700/t ($465). The prices are exw Kharagpur, eastern India & are applicable for Kolkata & Howrah market.
• Induction grade billet export offers to Nepal rally by $40/t this week to $520/t exw Durgapur (equivalent to $545/t CPT Nepal). Demand remains active despite a sharp surge in offers, stated by trade sources.
• Indian sponge iron export offers increased by $20-25/t to $380/t CPT Benapole (equivalent to $400/t CFR Chittagong, Bangladesh), however, no major deals as major buyers remain on wait & watch due to a sharp surge in offers.
• Steel grade pig iron prices rose by INR 2,500-6,200/t, w-o-w, due to supply shortage & strengthening billet prices. The major hike of INR 6,200/t was noticed in Rourkela, Eastern India, due to a sharp hike in bid price in SAIL pig iron auction.

Finished Long

India’s finish long steel market via induction route continued on a rising trend in this week as well, and the rebar prices moved up by INR 1,700-3,500/t w-o-w in the major supplying locations. As per market participants, appropriate transactions of rebar steel in the market lessened the inventories in mills, along with this active demand and buying inquiries and strengthening the cost of semi-finished all such factors prompted the manufacturers to increase their offers.

• Trade reference rebar prices of 10-25 mm through midsized mills assessed at INR 41,300-41,500/t exw Raipur, INR 45,000-44,400/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers is at INR 700-1,000/t and trade reference price of 200 mm Angle is at INR 43,900-44,300/t exw.
• Trade discounts in Raipur wire rod are currently at INR 1,000-1,300/t and trade reference prices stood at INR 40,700-41,000/t exw Raipur, INR 41,600-42,000/t exw Durgapur, size 5.5 mm.

Finished Flat

India’s domestic HRC prices continue to fall further this week on stagnant demand and rising inventories with traders. SteelMint’s benchmark prices for 2.5 mm thickness HRC stands at INR 53,500-54,000/t exy Mumbai, down by INR 750/t as compared to last week.

Key factors leading to price correction:

• Major HRC dealers and distributors are less likely to procure material from the mills at higher prices due to lower profit margins.
• Auto and pipe makers also reported sluggish growth in sales on moderate demand.
• The gap between the trade price and mill prices has widened by INR 2000/t due to limited sales in the domestic market.

On the other hand, mills are yet to have a re-look at their pricing strategy. They do not see domestic steel prices going up, but there may not be a big correction downwards. Also Indian steel mills may increase export allocations for March or April’21 shipments to offset bearish sentiments in the domestic market.

Reference Prices as on 20th Feb’21 (Week 8)
Prices are exw & exclusive of GST

Indian export reference prices as on 20th Feb’21
Prices in $/t
Source: SteelMint Research