The domestic prices of hot-rolled coils (HRC) and cold-rolled coils (CRC) continued to decline in the second week of Dec’21 on the back of slow demand, falling overseas market and correction in domestic raw material prices.
SteelMint’s benchmark HRC (IS 2062, 2.5-8mm) prices were assessed at INR 66,000-67,000/t, while those of CRC (IS 513 Gr O, 0.9mm) at INR 72,000-72,500/t. The prices mentioned above are on an exy-Mumbai basis, and exclusive of GST @ 18%.
Why are domestic prices under pressure?
SteelMint’s India HRC export index hits 9-month low: SteelMint’s India HRC export index has dropped to a 9-month low of $790/t FOB east coast. Similar levels were last witnessed towards the end of Mar’21. Talking of the current week, the offers have dropped by $10/t as steel producers had to reduce offers for the traditional export markets to boost buying interest. Vietnamese buyers continued to prefer domestically produced HRCs amid a slower pace of recovery and rising concerns because of increasing Covid-19 cases.
This also has a bearing on the domestic market sentiments and trade prices.
Raw material prices on a decline: PSU miner NMDC has cut iron ore prices sharply by INR 200-870/t for Dec’21 deliveries. Lumps prices witnessed a comparatively sharper correction than fines. After the price cut, the miner’s lump offers have hit an eight-month low.
FoR Prices, excluding royalty, DMF & NMET
Furthermore, the weekly SteelMint’s Odisha iron ore (fines, Fe 63%), as assessed on 4 Dec’21, has fallen to INR 5,500/t ex-mines Odisha, down by INR 100/t w-o-w. Also, in the past six weeks, the same had dropped by INR 1,500/t compared with INR 7,000/t ex-mines level seen towards the end of Oct’21.
Imports turn viable from FTA countries: Recently an Indian importer booked around 20,000-30,000 t of HRC (IS 2062) at around $825-835/t CFR India, which translates into INR 62,500/t CFR levels. Falling global prices have weighed down imported HRC prices in India which may somehow keep domestic prices under pressure. Distributors have initiated evaluating the import option available and expect the domestic prices to be further corrected in the near term.
Near-term outlook: Trade channel sources suggest that the Indian domestic HRC and CRC prices are trading at a premium against the landed cost of imports, which is likely to exert pressure on domestic market prices in the near term.
Leave a Reply