Weekly round-up: Prices of semis, longs inch down on softening raw material costs

The Indian semi-finished steel market fell during week 43 (18-23 Oct’21).

Domestic billet prices dropped by INR 1,000-4,000/tonne (t), while sponge iron offers moved down by INR 500-1,800/t, w-o-w, due to falling raw material prices during the festive season and in the run-up to Diwali, resulting in price corrections.

Sources are expecting semis’ prices to remain under pressure, anticipating a further fall in raw material offers along with improvement in sponge iron supply in the spot market.

In addition, the induction furnace finished long steel market witnessed a price correction by up to INR 3,500/t, w-o-w, across the country.

Domestic HR-plate prices increased by INR 1,500/t ($20/t) this week, hitting an all-time high.

Iron ore and pellets

• SAIL conducted an auction on 20 Oct for 60,000 t of iron ore fines (Fe 62.5%) from the Bolani iron ore mines in Odisha. Out of the total quantity on offer, the company received bids for 44,000 t offered at INR 5,900/t and 16,000 t at INR 5,850/t (loaded on to wagon, including royalty, DMF, NMET and the additional premium as per the MMDR Amendment Act). Bids increased by INR 350/t against the last auction held on 6 Oct.
• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, was stable at INR 13,800/t DAP Raipur on 22 Oct. Trading remained muted, though.
• The Odisha government has re-scheduled the Teherai iron and manganese mine block auction, as per latest reports. The tender, floated on 22 Oct’21, will close on 6 Dec.
• SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has remained stable, w-o-w, at $150/t. KIOCL has concluded an export deal for 55,000 t of pellets (Fe 63% and 2-2.1% Al) on 22 Oct via tender. The deal was heard concluded at $165/t FOB. The company’s last tender held in end-Sep was cancelled due to limited participation.

Coal

• Australian coking coal export prices continued to rise steadily over the past week, supported by active trading in the ex-China Asian markets amidst limited spot availability.
• Presently, Australian premium coking coals are competitively priced relative to US and Canadian material, as prices have received boost as a result of strong buying interest from China.
• However, as Australian premium hard coking coal prices rallied touching nearly $400/t FOB Australia, some buyers have stepped back to the sidelines. In the Chinese market, supply tightness of premium coking coal due to insufficient domestic supply and limited overseas supply, following import restrictions on Australian coals and COVID-related disruptions affecting Mongolian supplies, provided support to rising offers, while demand stayed steady despite concerns around steel production curbs.
• Current prices of premium hard coking coal (HCC) are assessed at around $398/t FOB Australia, $615/t CNF China and $430.50/t CNF India.
• Portside prices of South African RB2 prices fell by INR 2,500/t this week to INR 17,000/t ex-Gangavaram amid the correction in imported coal prices.
• South African RB1 prices fell sharply by $45/t, w-o-w, to $186/t after China’s thermal coal prices corrected following the government’s intervention to stabilise rising coal prices. Discounts for RB2 and RB3 coals were assessed at $20/t and $31/t, respectively.

Ferrous scrap

Amid declining domestic semi-finished steel prices and slow finished steel sales, buyers of imported scrap have lowered enquiries towards the weekend after booking material actively at the beginning of the week. Meanwhile, imported scrap prices remained at higher levels, while trades have slowed down, considering the price correction in the domestic market.

• Around 1,500 t of UK/EU-origin shredded scrap in containers was traded at Vizag at an equivalent price of $550/t CFR Nhava Sheva. Fresh offers for shredded are at $550-555/t levels, moving up slightly by $5/t w-o-w.
• UK-origin HMS (80:20) offers are heard at $515-520/t CFR Nhava Sheva, up over $10/t w-o-w. Buyers were not interested in these offers.
• UAE-origin HMS 1 is being quoted at $505-510/t CFR.

Semi-finished

• Indian sponge iron export offers increased to around $515/t CPT Benapole, equivalent to $545/t CFR Chittagong, Bangladesh. About 5,000 t of deals were reported this week.
• Steel grade pig iron prices fell by INR 700-1,700/t with a major decline of INR 1,000-1,700/t seen in the central, south and northern regions followed by INR 700/t in eastern India. Prices moved down on account of declining steel prices and weak demand on high offers that were floated.
• IF route billet export offers fell by $20/t, w-o-w, to $625-630/t exw-Durgapur, equivalent to $650-655/t, CPT Nepal, via road delivery. About five-six rakes (12,500-15,000 t) of BF route billet deals were reported this week at $650/t exw (loaded on to rake), equivalent to $665-670/t CPT Nepal.
• SAIL has scheduled an auction for 500 t of steel grade pig iron (by road) for 26 Oct from the IISCO Steel Plant.
• Vedanta Ltd. has floated an export tender for 30,000 t of steel grade pig iron and the shipment is scheduled for Nov.
• A state-owned Indian mill is reported to have concluded an export tender of 15,000-20,000 t of steel blooms (240×350 mm) for Indonesia at around $670/t FOB India.
• SAIL has floated an export tender for around 18,900 t of prime mild steel non-alloy bloom from its IISCO Steel Plant in West Bengal. The offer must be valid up to 17:00 IST of 25 Oct.
• SAIL conducted an auction for 10,000 t of basic grade pig iron on 20 Oct from the Bhilai Steel Plant (BSP). The entire quantity was booked at a weighted average price of INR 43,490/t exw.

Finished long

Long steel manufactured via the induction furnace route observed limited transactions across majors in the country. Due to high price of rebar weak demand was reported in the spot market, which led to rising inventories at mills and pressured manufacturers to reduce their rebar (Fe 500 grade) prices by up to INR 2,600/t, w-o-w, SteelMint assessment shows.

• The trade reference induction route rebar steel price of 10-25 mm size Fe 500 grade material is assessed at INR 49,800–50,200/t exw-Raipur and INR 52,000-52,400/t exw-Jalna.
• The trade discount given by the Raipur-based heavy structural steel manufacturers was INR 900-1,200/t and trade reference price of 200 mm angle stood at INR 55,800-56,200/t exw-Raipur.
• Trade discounts given by Raipur based wire rod suppliers is at INR 2,500-3,000/t and trade reference prices stood at INR 49,000-49,500/t exw Raipur & INR 50,500-50,800/t exw Durgapur, size 5.5 mm.

Ferro alloys

Ferro alloys prices revealed a mixed trend with manganese alloys and ferro silicon prices rising. However, ferro chrome prices decreased this week.

• Silico manganese prices are skyrocketing post the festive holidays owing to robust enquiries in line with rising international prices. Raipur producers are now offering at INR 136,900/t exw.
• Ferro manganese touched historic highs this week owing to better demand from the export market. SteelMint assessed the current price of ferro manganese at INR 137,000/t exw-Raipur and INR 136,000/t exw-Durgapur.
• Ferro chrome prices decreased to INR 126,400/t exw-Jajpur owing to tepid demand in the domestic market. International demand is also muted due to high ocean freight costs.
• According to SteelMint, ferro silicon prices rose to a new high of INR 285,350/t owing to tight supply. Higher power costs have created a supply shortfall worldwide. As a result, prices of ferro silicon are increasing, w-o-w. Meanwhile, Bhutanese producers are offering at INR 285,000/t exw.

Finished flat

The trade reference prices of HRCs and HR-plates scaled up by INR 1,600/t this week. The trade market prices continued to increase at a higher pace with shortage of thinner gauge coils below 2mm and in 8mm and above gauges in plates. Hike in prices announced by the primary steel mills also boosted prices. Tata Steel and PSU major SAIL increased prices by INR 750/t effective from 15 Oct and 19 Oct, respectively, while JSW announced an INR 1,000/t increase effective 15 Oct. On the other hand, prices of CRC didn’t post any major increase on a weekly basis, because of limited demand from downstream industries.

Trade reference prices:

• SteelMint’s benchmark price assessment for HRC (2.5-8 mm IS 2062) stands at an all-time high of INR 72,000-73,000/t exy-Mumbai.
• HR plates (IS 2062/E250, 5-10mm) prices were at INR 72,000-73,000/t exy-Mumbai.
• CRC (IS 513 Gr O, 0.9mm) prices remained range-bound at INR 75,500-76,000/t exy-Mumbai.

Considering the increase in raw material costs and supply constraints, market participants are expecting a further hike in prices of around INR 1,000-2,000/t to be announced by mills in early-Nov. However, towards the weekend, the market turned silent with the drop in metal prices on China’s stock exchange dampening sentiments.