Weekly round-up: Indian steel market sees uptick in prices

Iron ore and pellets

• Steel Authority of India (SAIL) conducted an auction recently for 104,000 t of iron ore fines and tailings (Fe 60.13%, Fe 52.52%, and Fe 51.11% grades) from its Dalli and Rajhara iron ore mines in Chhattisgarh. The auction failed to fetch any response.
• State-owned Odisha Mining Corporation (OMC) scheduled an e-auction for iron ore lumps on 31 Jul’21. The auction is being conducted for 687,000 t of material. The base price has been increased by up to INR 2,860/t as against the price at the last e-auction on 2 Jun.
• SteelMint’s bi-weekly domestic pellet index, PELLEX, increased marginally by INR 50/t to INR 14,750/t DAP Raipur on 30 Jul’21.
• SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) has recorded a drop of around $21/t w-o-w and currently stands at $196/t. The index has fallen to a nearly three-month low, as per SteelMint data.
• SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $4/t w-o-w to $76/t FoB east coast India.

Coal

• The FoB price of Australian premium low-volatile (PLV) hard coking coal (HCC) increased by a marginal $1/t w-o-w, as spot trading activities resumed with the conclusion of European steelmaker ArcelorMittal’s tender earlier this week.
• The deal was concluded at $205/t FoB, for 80,000 t of Australian premium mid-volatile Peak Downs North, with end-Aug’21 laycan.
• Besides, Australian coal miner Stanmore Resources has acquired a mining lease to develop its Isaac Downs project in Queensland.
• Meanwhile, tradable resources of seaborne coking coal are still presently limited, without active offers for PLV HCC, according to market sources.
• Latest prices for the premium HCC grade are assessed at around $215.50/tonne (t) FoB Australia, $327.00/t CNF China and $240.15/t CNF India.
• South African RB2 portside prices remained largely unchanged this week, averaging INR 8,100/t ex-Gangavaram.
• South African RB1 prices rose by $2.7/t w-o-w to hit the $133/t-mark this week. Discounts for RB2 and RB3 were assessed at $19/t and $28/t respectively.

Ferrous scrap

With a decline in Turkey’s imported scrap prices, trade inquiries in India have witnessed a slight improvement. Notably, imported scrap prices into Turkey have come down by $5-10/t this week after trade resumed post-Eid.

The Indian market scenario is still not good at present. Buyers are likely to return to the market before 15 Aug’21 as now they have limited stock left with their mills. Additionally, another raw material substitute like sponge iron production has also come down SteelMint learnt from market sources.

• Fresh offers for shredded are being offered at $530-535/t CFR levels.
• A decent quantity of US-origin HMS has been sold at $475/t CFR Nhava Sheva.
• HMS 1&2 from the UK are being offered at $485-490/t CFR levels Dubai, while HMS 1 from the UAE is being quoted at $485-490/t CFR levels.

Ferro alloys

• Silico manganese prices remained stable in India, despite dull demand from the domestic market. SteelMint assessed that the current market price of silico manganese for 60-14 grade is hovering around at INR 93,500-94,000/t exw for both Raipur and Durgapur.
• Ferro manganese prices were reduced by INR 2,000-2,500/t this week as buyers were willing to book their material at low prices. Currently, prices of ferro manganese are at INR 97,000/t exw Raipur, and at INR 96,000/t exw-Durgapur for HC 70%, SteelMint learned.
• Ferro chrome prices have been hitting historic highs, with producers quoting INR 129,000/t, according to SteelMint sources. The current market price of ferro chrome is at INR 122,000/t exw-Jajpur for HC 60% grade, with some deals closed at INR 125,000/t.
• Ferro silicon prices were reduced to INR 131,750 /t exw-Guwahati and INR 130,000/t exw-Bhutan. Most of the domestic buyers are waiting for the new price releases in Aug by a Bhutanese producer, while export sales are muted due to container shortage.

Semi finished

The Indian semi-finished steel market remained supported as prices gained further during week 31. Domestic billet prices increased by INR 500-1,550/t across the country with a major hike of INR 1,250-1,550/t seen in Durgapur and Rourkela. Similarly, sponge iron prices also went up by INR 800-1,800/t w-o-w.

• Vizag Steel has floated an export tender for 60,000 tonnes (t) of 150*150mm 3SP/4SP blooms on 31 Jul’21, whose due date is 3 Aug’21.
• An eastern-India-based leading steel mill concluded an export tender for 25,000 t of steel billets (150x150mm; grade: 3SP/4SP) for Sept’21 shipment at around $650/t FoB (equivalent to $725/t CFR China).
• SAIL has scheduled an auction for 4,800 t of steel-grade pig iron from Rourkela Steel Plant in Odisha on 3 Aug’21.
• Steel grade pig iron prices rose by INR 300-1,000/t across regions with major hike seen in the eastern region by INR 800-1,000/t followed by INR 200-500/t in the north and central regions. Strong demand along with slight supply shortage in the spot market led to the spike in Indian pig iron prices.
• Induction grade (IF) billet export offers increased by $20-25/t w-o-w with fresh offers hovering at $585/t, exw-Durgapur (equivalent to $610-615/t CPT Nepal). Demand was active this week and over 10,000 t of deals were confirmed.

Finished longs

The induction furnace route, finished long steel market this week observed an upward trend in terms of prices which varied across regions. There was a slight improvement in buying enquiries and transactions for rebar steel in the spot market, which allowed the TMT manufacturers to lift prices by INR 300-1,300/t w-o-w across regions, SteelMint’s assessment shows.

Improved demand in the western and southern regions seemed to support the sellers in keeping offers stable despite lower levels of trade in the middle of the week. There was marginal adjustment in trade prices in other markets, depending upon raw material costs which were higher.

• Trade reference induction grade rebar steel prices of 10-25 mm size were assessed at INR 44,900-45,200/t exw-Raipur and at INR 48,000-48,400/t exw-Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers stand at INR 600-900/t while trade reference prices of 200-mm angles were at INR 49,200-49,600/t exw-Raipur.
• Trade discounts given by Raipur-based wire rod manufacturers were at INR 600-800/t. Trade reference prices stood at INR 46,400-46,600/t exw-Raipur, and at INR 46,000-46,300/t exw-Durgapur for 5.5-mm category.

Finished flats

Domestic HRC trade prices increased this week as traders resumed buying in anticipation of an increase in prices in Aug’21.

SteelMint’s benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRC) increased by INR 1,400/t to INR 65,000-66,000/t exy-Mumbai as compared to INR 64,000-65,000/t seen a week ago. The prices mentioned above are exclusive of GST @18%.

Factors driving domestic HRC prices:

• Better realisations in exports may lift domestic prices: Last week, Indian mills exported over 30,000 t of HRCs to South Korea at $970/t CFR basis. Offers to the UAE were heard to be at around $970/t CFR and to Turkey at $955-960/t CFR. Offers to Vietnam were at $930-935/t CFR.
• Lower prospects of price support: Mills booked decent quantities of HRCs for exports amid sluggish sales in July, pushing them to focus on overseas sales over domestic. Recently, one of the major steel mills based in western India withdrew its rebate offered in July, a reliable source informed SteelMint.
• Traders resume buying in anticipation of price hike: Market buzz on the announcement of an export tax from China along with higher export offers resulted in resumed buying among traders.

According to the factors mentioned above, there is a potential that mills may increase prices in Aug by INR 500-1,000/t or they can announce a rollover to escalate buying in the domestic market. But there is limited chance of price correction due to increased HRC export bookings from India.

Reference prices as on 31st Jul’21 (Week 31)
Prices are exw & exclusive of GST

Indian export reference prices as on 31st Jul’21
Prices in $/t
Source: SteelMint Research