Weekly round-up: Domestic steel market remains weak

The Indian steel market witnessed dull sentiments, while prices were in free fall during week 27 of CY’21.

Domestic semi-finished steel prices decreased steadily in the range of INR 200-1,700/t across regions with a major fall of INR 1,500-1,700/t in the billets markets of Jalna and Chennai. Similarly, low demand and falling billet prices weighed on sponge iron offers, as prices declined by INR 200-1,000/t.

The induction furnace grade rebar market continued to witness a downward momentum and offers declined by INR 200-1,600/t w-o-w basis.

Indian HRC trade prices declined sharply by INR 1,500-2,000/t this week due to sluggish demand in the market.

Iron ore and pellets

• Steel Authority of India Ltd (SAIL) conducted an auction on 2nd July for 28,000 t of iron ore fines from its Rajhara mines in Chhattisgarh. The entire material on offer received bids at INR 6,380/t (loaded, including royalty, DMF and NMET).
• State-run National Mineral Development Corporation Ltd (NMDC) is expecting the demerger of its 3 mn t/annum steel plant at Nagarnar in Chhattisgarh by the third quarter of FY’22, senior officials have informed.
• State-owned miner Odisha Mining Corporation (OMC) has scheduled an iron ore fines e-auction on 8 Jul’21. The total quantity to be auctioned stands at 799,000 t. The material to be offered will be from OMC’s Gandhamardan, Daitari, Koira, Jilling, Tiring Pahar and Guali mines. The base price of the auction is expected to be decided on 5 Jul, as per SteelMint reports.
• On 24 Jun’21, the Ministry of Environment, Forest and Climate Change (Forest Conservation Division) communicated to the Karnataka government that the Forest (Conservation) Act, 1980 approves diversion of forest land for iron ore and manganese mining in the Devadari Hill Range in favour of state-run KIOCL.
• SteelMint’s bi-weekly domestic pellet index, PELLEX, fell by INR 100/t to INR 15,800/t, DAP Raipur, on competitive pricing from other states.
•  SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) increased marginally by $3/t w-o-w to stand at $85/t, FoB east coast India.
• SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) has recorded a rise of around $6/t w-o-w and currently stands at $229/t.

Coal

• Australian premium hard coking coal prices rose higher this week, on consistently strong buying interest amid supply tightness.
• However, Indian demand for seaborne coking coal remained largely subdued, while ongoing safety checks and suspension of operations at various coal mines fuelled supply concerns in China.
• Latest prices for premium hard coking coal are assessed at around $198.50/t FoB Australia, $308.00/t CNF China and $227.40/t CNF India.
• Short-term prices are anticipated to remain supported as supply tightness is unlikely to ease anytime soon.
• South African RB2 portside prices remained largely unchanged this week, averaging at INR 8,000/t ex-Gangavaram.
• South African RB1 prices rose further by $1.20/t w-o-w to $117.30/t. Discounts for RB2 and RB3 were assessed at $17/t and $27/t respectively.

Ferrous scrap

India’s imported scrap market remained quiet for yet another week. Traders and mills shied away from booking cargoes on falling steel margins. However, a major mill managed to conclude a fresh deal.

A leading Indian steel mill has booked around 2,000 t of shredded scrap in containers recently. The deal was concluded for UK/Europe origin shredded scrap at around $540/t CFR Mundra basis, sources reported. It is believed that imported scrap trade is likely to remain slow due to the onset of monsoons. Falling steel margins and production cuts have kept imported scrap bookings on the lower side.

Meanwhile, huge disparity between bids and offers have slowed down trading. July will remain slow for fresh scrap bookings as mills have slashed production, SteelMint learnt from sources.

• Fresh offers for UK/EU-origin shredded are being cited at $540/t CFR, largely stable on a weekly basis. However, hardly any interest has been seen from the secondary steel units, SteelMint notes.
• Offers for UAE-origin HMS 1&2 (80:20) stand at $475-480/t CFR while HMS 1 from the same origin is being quoted at $490/t CFR.
• UK-origin HMS is being quoted at $495/t CFR, firm w-o-w.

Ferro alloys

• Silico manganese prices decreased to INR 98,500/t exw Raipur and INR 98,000/t exw Durgapur owing to dull demand from domestic market. Exporters are offering for oct- nov shipments at $ 1520 FOB for 65-16 grade.
• Ferro manganese prices decreased by INR 2500 to INR 101,500/t exw Raipur and INR 101,000/t exw Durgapur w-o-w. However, MOIL’s ferro manganese auction received a good response owing to tight supply in the domestic market.
• Ferro silicon prices increased further at INR 143,000/t exw Guwahati due to supply crunches. However Bhutanese producers offered at INR 134,000/t exw. Supply- demand mismatch drove bearish sentiments.
• Ferro chrome prices skyrocketed due to supply shortfall in the domestic market as OMC’s chrome ore dependable producers reduced their production due to higher chrome ore prices. Demand from china waned. SteelMint assessed current market price of Ferrochrome is at INR 104,000/t exw Jajpur.

Semi finished

Indian semi-finished steel prices decreased sharply, as per SteelMint assessment, with domestic billet prices falling by INR 200-1,700/t across regions, with a major fall of INR 1,500-1,700/t seen in Jalna in western India and Chennai. Similarly, low demand and falling billet prices weighed on sponge iron offers, as prices declined by INR 200-1,000/t.

• The Steel Users Federation of India (SUFI), in association with BSE, will launch steel billets futures trading on the BSE platform from 13 Jul’21.
• SAIL held an auction for 3,000 t of basic grade pig iron on 1 Jul’21 from its Rourkela Steel Plant (RSP) in Odisha. Out of the total quantity on offer, 2,900 t was booked at INR 36,000/t exw.
• Jindal Steel and Power (JSPL) has drawn up plans of investing nearly INR 7,500 crore to set up a 2.25 mn t/annum integrated steel plant at Nellore in Andhra Pradesh.
• Vizag Steel has floated an export tender for 10,000 t of steel billets of size 65*65 mm, as per sources. The due date of the tender is 6 Jul’21 and the shipment is likely to be scheduled for end-Aug.
• Indian sponge iron export offers fell this week by $15-20/t on account of weak demand. Fresh offers floated are at $435-440/t, CPT Benapole, equivalent to $460/t, CFR Chittagong, Bangladesh.
• Steel grade pig iron prices drop further by INR 500-1,500/t across regions due to weak demand on planned curtailed furnaces productions.
• Induction grade (IF) billet export offers fell by $15-20/t w-o-w with fresh offers at around $535/t, exw-Durgapur (equivalent to $560-565/t CPT Nepal). Meanwhile, demand remains subdued, as per sources.

Finished long

The induction furnace route finish long steel market continued a downward momentum in prices, and prices in major markets declined by INR 200-1,600/t w-o-w, SteelMint assessment shows.

Limited buying enquiries for rebar from the retail and project segments and falling semi-finished steel prices have turned traders cautious about booking bulk cargoes.

• Trade reference prices for induction furnace grade rebar (10-25 mm) are assessed at INR 43,100-43,400/t exw Raipur and INR 45,400-45,800/t exw Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers stand at INR 700-1,000/t and the trade reference price of 200 mm angle is at INR 47,000-47,400/t exw Raipur.
• Trade discounts given by Raipur-based wire rod manufacturers is at INR 800-1,000/t and trade reference prices stood at INR 44,700-44,900/t exw Raipur, INR 43,000-43,300/t exw Durgapur, for size 5.5 mm.

Finished flat

Indian HRC trade prices declined sharply by INR 1,500-2,000/t this week due to sluggish demand. However, in Mumbai prices remained largely moderate. SteelMint’s benchmark prices for 2.5 mm hot-rolled coils (HRC) stand at INR 66,000-67,000/t (exy-Mumbai) this week.

Domestic HRC trade prices remained under pressure due to the following reasons –

• Fall in global HRC prices- SteelMint’s Indian HRC (SAE 1006) export index stands at $920/t FoB east coast India, down by $70/t against $990/t FoB w-o-w. Disparity between bids and offers have contributed to trades drying up in the traditional export destinations like Vietnam and the Middle East absent this week. This, in turn, has impacted the domestic steel market.
• Indian mills likely to announce rebates to propel buying: Leading Indian steel mills are likely to announce rebates by around INR 2,000/t to push buying in the domestic market. However, an official announcement is still awaited. Poor sales in the domestic market and limited alternatives for exports have led to a correction in prices.
• Demand continues to remain dull: Traders are awaiting price clarity from the mills since they are resisting purchases at higher prices. “There are more sellers in the market compared to buyers,” informed a major distributor based in Mumbai.

Near-term outlook: Domestic HRC prices are expected to correct in the near-term due to the arrival of the monsoons and sluggish demand.

Reference prices as on 3rd Jul’21 (Week 27)
Prices are exw & exclusive of GST

Indian export reference prices as on 3rd Jul’21

Prices in $/t
Source: SteelMint Research