Sluggish sentiments are continuing in the domestic HR plates trade segment over the past three weeks. Consequently, India’s leading HR plate manufacturer, Jindal Steel and Power Limited (JSPL) is mulling plans to cut the list prices of its plates by INR 1,000/tonnes (t), to bring these down to around INR 68,000/t, exy-Mumbai, SteelMint learned from credible market sources.
However, Steel Authority India Limited (SAIL), the country’s largest government-owned mill, is yet to take a call on revising its list prices, SteelMint understands. The current effective list prices for HR-plates from SAIL stand at around INR 69,000-70,000/t, exy-Mumbai.
Factors that impacted domestic price trend
- Staggered lockdowns: The second wave of Covid-19 in India and the consecutive lockdowns announced in June ’21 kept market activity low. This largely impacted the demand for plates in the retail segment.
- Consumption low from many end-user industries: Consumption of plates in the domestic market continues to remain low since the resurgence of Covid-19 in Mar ’21. Heavy engineering, industrial machinery, fabrication and ship-building are a few industries bearing the brunt of the severe second-wave of Covid-19. “The demand was largely coming from the projects which were announced earlier and are nearing their completion. There is no demand driver in the near term,” said a manufacturer.
- Arrival of monsoon: The monsoons had hit the southern provinces of the country towards the middle of the month, which has further dampened demand that was already reeling under the extension of lockdowns. Also, the monsoons are a seasonally weak period for the steel market in India.
- Global plate offers witness continuous decline: Global HR-plate export offers have witnessed a continuous decline throughout the month. The Chinese heavy-plate export offers for the current week are assessed at $880-900/t FoB China, down from the previous week’s $900-930/t FoB basis. In a similar vein, the offers have fallen by around $30-50/t as against $920-930/t FoB at the beginning of the month.
Why are global plate offers down?
- Possibility of production curbs easing by the Tangshan government.
- Continued air of uncertainty regarding levy of an export tax.
- Expectation of a further cut in prices kept buyers on the sidelines.
- Low demand from South East Asian countries on surging Covid-19 cases.
As of week 26, SteelMint’s benchmark assessment for HR-plates (IS-2062/E250) of 5-10 mm thickness dropped by INR 1,000/t to INR 65,500-66,500/tonne (t) exy-Mumbai as against INR 66,500-67,500/t exy-Mumbai a week back. Prices are exclusive of GST @ 18%.
What next?
Summing up the month’s snapshot, it is clear that the market did not accept the hike announced by mills for June ’21. Also, the monsoon will keep demand from construction and infrastructure at bay for the next couple of months. However, steel manufacturers foresee a revival in demand from power, energy, OEMs, wind tower and fabricators by the end of July or early Aug ’21.
“Currently we are seeing demand mainly from water pipeline projects, and the government projects announced earlier,” said a market participant.
Thus, it would be interesting to see to what extent the mills will revise prices for July deliveries amid such mixed sentiments.
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