In week 25 of CY’21, domestic sponge iron prices declined by INR 200-1,000/t in many regions with a major drop observed in Eastern and Southern India. Considerably, billet offers also fell by up to INR 1,700/t witnessing a sharp fall in Mandi Gobindgarh and Hyderabad markets.
Also, induction furnace (IF) grade rebar prices recorded a downward momentum during the week on account of limited demand in the market and prices dropped by INR 200-1,800/t w-o-w.
Indian HRC trade prices declined by INR 1,500-2,000/t this week in the northern region due to slow demand in the domestic market.
Iron ore and pellets
- SAIL may soon receive permission for resumption of iron ore sales through auctions from its mines in Jharkhand, sources informed SteelMint. SAIL’s Gua mine in Jharkhand has stocks of around 30 million tonnes (mn t) of fines (Fe 60-61%), while the Kiriburu and Meghahatuburu mines have a combined stock of around 5 mn t of iron ore tailings. Once the steel major receives permission for conducting auctions from the Jharkhand government, iron ore fines supplies are expected to ease, SteelMint believes. Tight ore supplies have been a major concern for eastern- and central India-based steel mills.
- Limited buying interest and a fall in domestic sponge iron prices lowered price indications for pellets in Bellary, as per sources. SteelMint’s current assessment for pellets (Fe 63%) stands at INR 13,550/tonne (t), exw-Bellary, lower by INR 200/t compared to the last assessment on 15 Jun’21. Pellet sponge (P-DRI) prices in the region declined by INR 400/t w-o-w.
- State-run iron ore miner NMDC will conduct an auction for 63,000 t of fines (Fe 61%) on 24 Jun’21 from its Bacheli mines in Chhattisgarh. The company recently announced another auction for 105,000 t of iron ore slimes (Fe 57/58%) from Bacheli scheduled for 23 Jun’21.
- SteelMint’s bi-weekly domestic pellet index, PELLEX, remained stable this week at INR 16,200/t, DAP Raipur. The market was silent and hardly any buying inquiry was heard against current pellet offers, given falling steel margins.
- SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index decreased by $8.5/t w-o-w to $88/t, FoB east coast India.
-SteelMint’s Indian pellet export index (Fe 64%, 3% Al, FoB east coast) recorded a marginal hike of around $1/t w-o-w to $230/t.
Coal
- Australian coking coal export prices sustained their upward momentum this week, on consistently strong buying interest for Aug’21 loading cargoes amidst supply tightness.
- However, Indian buyers are not expected to resume full-scale restocking despite the easing of lockdowns in several states, as end-users have sufficient inventory for the near term.
- Latest prices for the premium HCC grade are assessed at around $177.50/t FoB Australia, $290.00/t CNF China and $205.45/t CNF India.
- South African RB2 portside prices remained largely unchanged this week, averaging at INR 8,000/t ex-Gangavaram.
- South African RB1 prices eased slightly, falling by $1.6/t w-o-w to reach $114.2/t this week. Discounts for RB2 and RB3 were assessed at $18/t and $28/t respectively.
Ferrous scrap
India’s imported scrap market remained mostly quiet for yet another week. Imported scrap offers into India stayed steady after witnessing a hike of $15/t earlier this week.
On the other hand, the finished steel market remained sluggish due to heavy rains, slower construction, and infrastructure activities. Higher raw material costs and falling finished steel prices squeezed the margins of Indian secondary players.
In addition, the depreciating Indian rupee (INR) against the dollar ($) and slower deliveries are other concerns for scrap importers. The INR slumped to 74 versus the dollar, compared to the 72.5 levels seen in early-Jun’21.
- SteelMint’s assessment for UK/Europe-origin containerised shredded scrap stood at $540/t CFR Nhava Sheva, higher by $15/t w-o-w.
- Fresh offers for the UAE-origin HMS 1 are now at $495-500/t CFR levels and HMS 1&2 (80:20) at $490/t CFR.
Ferro alloys
The overall market saw a bullish trend with domestic silicomanganese and Ferrosilicon prices having increased record levels. Meanwhile, Ferrochrome prices rebounded due to constrained supply.
- Silico manganese prices skyrocketed after decades and set a new high at INR 100,125 – 100,250/t EXW for both Raipur and Durgapur. In addition, the European market is ready to book material at escalated prices while domestic buyers concluded deals for small quantities.
- Ferro manganese prices spiked due to good demand from both export and domestic market in line with a supply shortage.SteelMint assessed the current price at INR 99,750 Exw Durgapur.
- Ferro Chrome prices increased at INR 97,000/t Exw Jajpur- INR 4,000/t high w-o-w, after the good response at Vedanta’s Ferrochrome auction amidst supply crunches. Although the European market portrays a good demand, But the producers still have their focus on China.
- Ferro Silicon producers are booked till next month on multi-year high prices at around INR 134,000 to 140,000/t for both Guwahati and Bhutanese markets as there is a tight availability. It is expected to further rise so steelmakers are not willing to book extra material.
Semi-finished
On a weekly basis, domestic sponge iron offers fell by INR 200-1,000/t in major locations with a particularly major drop observed in eastern and southern India. However, billet prices also declined by up to INR 1,700/t witnessing a sharp fall in Mandi Gobindgarh and Hyderabad markets.
- Indian sponge iron export offers fell this week by $5-10/t on account of weak demand. Fresh offers floated are at $475/t, CPT Benapole, equivalent to $495/t, CFR Chittagong, Bangladesh.
- Steel grade pig iron prices dropped by INR 1,000-1,500/t in east and northern India. However, in the central region, prices remained stable following average supply along with volatility in steel prices.
- Induction grade (IF) billet export offers plunged by $30/t w-o-w with fresh offers at around $565/t, exw-Durgapur (equivalent to $590-595/t CPT Nepal). However, blast furnace (BF) grade billet offers were firm with a fresh deal concluded for a rake at around $640-645/t, CPT Nepal, through an eastern India-based primary mill.
Finished longs
The induction furnace route finished long steel market witnessed a downward momentum in terms of prices and demand this week too. In most of the major rebar supplying regions, prices declined by INR 200-1,800/t w-o-w, SteelMint assessment shows. Corrections in semi-finished steel prices and uncertain market trend, along with rainfall in some regions affected the spot trade activities and buying enquiries in the market. All these factors led to a limited demand for rebar. Following these, rising inventories in mills prompted the long steel manufacturers to reduce their offers.
- Trade reference induction grade rebar steel prices of 10-25 mm size were assessed at INR 45,500-45,700/t exw-Raipur and INR 47,300-47,700/t exw-Jalna.
- Trade discount given by Raipur based heavy structural steel manufacturers stood at INR 400-600/t. Trade reference prices of 200 mm angles were at INR 49,100-49,500/t exw-Raipur.
- Trade discounts given by Raipur based wire rod manufacturers were up to INR 1,000/t. Trade reference prices were at INR 45,300-45,500/t exw-Raipur and INR 44,800-45,000/t exw-Durgapur, for sizes 5.5 mm.
Finished flats
Indian HRC trade prices declined by INR 1,500-2,000/t this week in the northern region due to slow demand in the domestic market.
Reasons behind falling prices:
- Wide gap between trade, mill prices: This week, SteelMint’s benchmark prices for 2.5 mm HRC remained moderate at INR 66,500-67,500/t (exy-Mumbai) against last week. On the other hand, major steelmakers were offering HRCs at INR 70,000-70,500/t (exy-Mumbai).
- Mute domestic buying: The trade market continued to remain dull and quiet. Nobody was ready to lift the material. As a result, prices continued to fall in the Faridabad market, major traders in Faridabad and Mumbai said.
- Auto contracts not yet finalised for Q1: Automobile customers were not settling prices with the mills for the first quarter (Apr-Jun’21), Thus, Indian mills may take a hard stand on supplies to auto sector customers, SteelMint learned from reliable sources.
- Reduced exports to preferred destinations: Indian mills usually export HRCs to Vietnam, the UAE, and Europe. However, this time buying interest was limited from Vietnam due to cheaper prices in the domestic market. Meanwhile, the UAE re-rollers completed one round of bookings while the Indian HRC quota to Europe has been exhausted. This, in turn, created pressure among Indian mills to sell their material domestically.
Near-term outlook
Despite slow trade in the domestic market on higher steel prices, mills are less likely to correct prices in the near term. However, reduced buying interest globally may divert sales to the domestic market if mills provide rebates or discounts to boost sales.
Reference prices as on 19th June’21 (Week 25)
Prices are exw & exclusive of GST
Indian export reference prices as on 19th June’21
Prices in $/t
Source: SteelMint Research
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