Weekly: Indian steel market snapshot

Spot trades in Indian steel market were supportive in the beginning of week 15, however towards weekend the demand turned weak due to announced lockdown in several states by the government to control spread of Covid. Hence, this has resulted in a sharp fall in offers by up to INR 2,000/t ($28).

According to the assessment, Indian semi finished steel prices (including sponge iron & billet) have noticed a fall in offers by INR 200-1,800/t. Also, limited buying inquiries and trade activities were observed in the rebar market and prices have witnessed a drop of around INR 200-1,000/t.

In context to finished flat, market participants are expecting the prices to remain high as Indian steel mills have increased HRC prices by INR 4,000-4,500/t for April deliveries.

Iron Ore and Pellet

• Southern India-based KIOCL has achieved pellet production of 0.71 mn t in Q4 FY ’21, up by 7% y-o-y, as per Twitter post. The company has recorded a rise in its pellet sales volume which stood at 0.668 mn t in Q4 FY’21, up by 11.89% as against the CPLY.
• OMC has scheduled an e-auction on 13th Apr’21 for around 1.067 mn t seized iron ore from mines like Kasia, Jaribahal, etc. The average grade of material put to auction varies from Fe 49%- 65.84%.
• Serajuddin mine has resumed iron ore fines offers from its Balda iron ore block. The current offer price for Fe 63% fines is heard at around INR 6,200/t ex-mines (including Royalty, DMF & NMET) with effect from 6 Apr’21. The offers have increased against its last offer of INR 5,200/t in end-Feb’21.
• SteelMint’s bi-weekly domestic pellet index “PELLEX ” has decreased by INR 50/t to INR 13,550/t DAP Raipur amid a steep fall in sponge prices.
• SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index stood at $89/t FOB east coast India, marginally down by $1/t in recent deals. Chinese mills continued to prefer high-grade ore/pellets amid stricter restrictions.
• SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has increased by $8/t w-o-w to $190/t.

Coal

• Australian premium hard coking coal prices retreated further this weekon limited trading amid weak demand.
• Latest offers for the Premium HCC grade are assessed at around $110.00/t FOB Australia, $220.50/t CNF China and $129.55/t CNF India.
• South African RB2 portside prices saw a correction of INR 200-300/t this week amid limited trades. COVID-led lockdown and restrictions across various cities in India made buyers to take a step back in anticipation of adverse impact on demand from the end-user segment.
• South African API4 index remained rangebound at $95/t this week, while discounts for RB2 and RB2 were assessed at $15/t and $25/t respectively.

Ferrous Scrap

India’s imported scrap market has witnessed limited trades on increased lockdown restrictions being announced amid a sharp increase in COVID cases. On the other hand, limited container and material availability have continued to push offers up, SteelMint understands. The market will move up again for short term, while people are waiting to see if any correction comes since supply shortage in the overseas market looks to be strong.

• Fresh offers for shredded is being quoted at $465-470/t CFR Nhava Sheva basis, moving up by $10-12/t w-o-w, but hardly any trades were heard.
• HMS offers from UK/EU origin HMS 1&2 (80:20) is now cited at $430-440/t CFR levels.
• UAE origin HMS1 is now offered at $440-445/t CFR Nhava Sheva basis. Towards the beginning of the week, trades were heard around $420/t CFR basis.

Ferro Alloys

• Silico manganese prices remained firm as the buyers accepted higher prices with a limited quantity available in the domestic market. Currently, prices are at INR 89,000-90,000/t exw Durgapur and INR 92,000-93,000/t exw Raipur, while few producers are also offering at higher levels.
• Ferro manganese prices increased marginally in Raipur amidst bullish market sentiments, while remained stable in Durgapur. Meanwhile, there are only a handful of ferro manganese producers active in the domestic market. Currently, prices are at INR 84,000 – 85,000/t exw Durgapur and INR 86,500/t exw Raipur.
• Indian ferro chrome prices fell to INR 92,000/t after Chinese spot prices fell. Meanwhile, buyers are insisting on lower prices but the producers are unwilling to lower the prices due to higher production cost amidst soaring chrome ore prices and additional electricity tariffs in Odisha in the new fiscal year.
• Ferro silicon prices remained stable as producers are overbooked and have no selling pressure. Currently, prices are at INR 100,000/t Ex-Bhutan and INR 101,000/t exw Guwahati. However, few producers in Meghalaya are offering at higher levels as well.

Semi Finished

This week, Indian semi finished steel market observed average demand as billet offers plunged in the range of INR 200-1,800/t & sponge iron offers dropped by INR 200-1,400/t w-o-w.

• SAIL has scheduled an auction for 2,850 t (one rake) of pig iron on 13 Apr ’21 from Bokaro Steel Plant.
• Vizag Steel has floated an ocean sale export tender for 30,000 t steel grade pig iron on FOB ST Gangavaram port, Vizag .The due date is 16 Apr ’21.
• Tata Metaliks has raised basic (steel) grade pig iron price by INR 900/t for Apr ’21 deliveries to INR 40,100/t ($540) ex- plant, Kharagpur and prices are applicable for Kolkata & Howrah market.
• Vizag Steel’s pooled iron auction held on 06 Apr’21 & the entire material of 1,000 t was booked at INR 37,150/t exw, the bid price was INR 3,400/t higher compared to the last auction conducted by the steelmaker for the same quantity on 25 Mar’21.
• SAIL conducted an auction on 5th April for 9,200 t (steel grade) pig iron from Rourkela Steel Plant & the entire quantity booked at a weighted average price of INR 38,600/t exw.
• Induction grade billet export offers drop this week by $15/t to $535-540/t exw Durgapur (equivalent to $565/t CPT Nepal). However, demand remains limited as buyers waiting for more price corrections.
• Indian sponge iron export offers increased by $5/t and around 12,000 t deals reported at around $435/t CPT Benapole, equivalent to $445-450/t CFR Chittagong, Bangladesh.
• Steel grade pig iron prices further up by INR 300-1,500/t (w-o-w) across regions on account of active demand along with higher bids in floated auctions by SAIL.

Finished Long

India’s finish long steel market via induction route, in this week has witnessed a limited buying inquiries and trade activity in the spot trade market across the regions. However in terms of prices, manufacturers adjusted their offers depend upon the previous booking orders with them and movement of semi-finished steel prices which creates volatility in rebar prices on a week duration by INR 200-900/t, while in few markets of Central and Western regions prices have dropped over INR 1,000/t amid bearish market sentiments, trade sources reported to SteelMint.

• Trade reference rebar steel prices of 10-25 mm through midsized mills assessed at INR 44,200-44,500/t exw Raipur, INR 48,000-48,400/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers is at INR 1,200-1,500/t and trade reference price of 200 mm angle is at INR 47,100-47,500/t exw Raipur.
• Trade discounts in Raipur wire rod are currently at INR 1,000-1,200/t and trade reference prices stood at INR 43,800-44,000/t exw Raipur & INR 44,500-44,700/t exw Durgapur, size 5.5 mm.

Finished Flat

Domestic steel trade prices are expected to remain elevated as major Indian steel mills increase HRC prices since local prices are still at a discount to international levels.

SteelMint learned from a senior official at JSW that the prices have been increased by INR 4,000-4,500/t for April’21 delivery. The current price stands at around INR 57,500-58,000/t for HRC and 68,500 – 69,000/t for CRC (exy Mumbai), exclusive of GST @18%. Industry sources added that AM/NS India and SAIL have also hiked prices by INR 4,000/t in Apr ’21.

SteelMint’s benchmark prices for 2.5mm thickness HRC, stood at an all-time high at INR 60,500-61,000/t (exy-Mumbai). Prices do not include GST extra @18%.

Reasons driving domestic HRC prices are mentioned below:-

• Higher HRC export offers- Indian mills are offering HRC export offers at around $925/t CFR Vietnam and around $1000/t CFR for Europe.
• Healthy Demand for consumer durables- The FMCD industry is hopeful of high demand for consumer durables, especially cooling appliances. In addition to the weather, the rising Covid-19 cases along with the work from home culture are likely to fuel the demand for white goods in the country.
• Bullish demand from the automotive industry- The rise in steel prices was one reason for car and bike makers to hike rates of their models from Apr 1. Maruti Suzuki, Hero MotoCorp, Renault, Nissan, Toyota, and Ford are some of the companies that hiked prices.

Near Term Outlook- Firm demand, higher realizations and lower risk of cheap imports from China are likely to accrue benefits for Indian manufacturers and drive the domestic prices in the foreseeable future.

Reference Prices as on 10th Apr’21 (Week 15)
Prices are exw & exclusive of GST

Indian export reference prices as on 10th Apr’21
Prices in $/t
Source: SteelMint Research