Weekly round-up: Bearish sentiments weigh on semis market even as mills hike flat steel prices

The domestic steel market was dropped during week 15 (4 April-9 April’22). Semi-finished steel prices fell in the range of INR 1,550-3,100/tonne (t).

Domestic induction furnace finished long steel offers declined across regions in the range of INR 1,000-3,700/t w-o-w. The trade reference prices of flat steel products continued to inch up this week despite slow end-user demand.

Iron ore and pellets

• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 12,600/tonne (t) DAP Raipur on 8 Apr’22, up INR 300/t compared with the last assessment on 5 April.
• India’s pellet (Fe 63%, 3% Al) export index (FOB east coast) rose $13/t w-o-w to $165/t from $152/t on 30 March. The export market regained momentum following expectations that demand might resurface as domestic concentrate prices in China have started to climb.
• SteelMint’s weekly index for India’s low-grade iron ore fines (Fe 57%) exports stood at $54/t FOB east coast, increasing marginally by $3/t w-o-w. Prices have risen on the back of higher global prices and drop in vessel freight rates by $4-5/DMT this week.
• The Maharashtra government had put up four iron ore mines for e-auction on 31 Jan for grant of composite license. The state government had selected MSTC for the e-auction.
• In the latest update received, the name of the preferred bidder and final price offer for the block has been announced.
• According to SteelMint sources, JSW Steel has placed the highest bid for the Ajgaon iron ore block at a premium of 25%, ArcelorMittal/Nippon Steel India (AM/NS India) placed the highest bid for the Satarda iron ore block, quoting a premium of 71.25% and Fomento Industrial Private Ltd. placed the highest bid for the Mauli iron ore block at a premium of 96%.

Coal

• Australian premium low-volatile hard coking coal prices remained volatile this week, falling by $76/t w-o-w amid mixed buying sentiments globally. Latest prices for the premium HCC grade are assessed at around $404/t FOB Australia and $428/t CNF India.
• Portside offers for RB2 (5500 kcal/kg NAR) grade coal rise rose by INR 1,000-1,200/t to INR 21,500-22,500/t amid the rise in imported coal prices.
• South African RB1 coal prices for April rose by $15/t w-o-w to $270/t FOB amid fresh sanctions by announced by the European Union on Russia.

Ferrous scrap

• India’s imported scrap market remained quiet for yet another week. The fall in domestic prices led to a slowdown in trade for imported scrap. Neighbouring countries, Pakistan and Bangladesh, witnessed some trade. However, active bookings remained slow during the ongoing Ramadan month.
• Fresh offers for UK-origin shredded in containers are being quoted at $660/t CFR Nhava Sheva levels, unchanged w-o-w. UAE-origin HMS 1&2 in containers is being quoted at $555/t CFR, down significantly by $20/t CFR w-o-w.
• Buyers are mainly looking for short sea distances like Yemen, West Africa and Mauritius, as the comparatively lower offers and the short delivery period are the priorities now rather than origin. On the other hand, mills prefer domestic material at present as the landed cost of imports is comparatively high. The landed cost of imported Dubai-origin HMS stands higher by around INR 1,500/t compared with domestic scrap.

Ferro alloys

• The overall domestic saw bearish sentiments with manganese alloys, ferro silicon and ferro chrome prices declining w-o-w.
• Indian silico manganese (60-14) prices edged down by INR 3,050/t w-o-w due to oversupply amid weak demand from overseas. According to SteelMint’s assessment on 8 April, silico manganese prices were hovering around INR 105,000-109,000/t exw Raipur, Durgapur and Vizag.
• Indian ferro manganese (HC70%) prices dropped by around INR 5,000/t w-o-w in Durgapur on 8 April. Sluggish demand resulted in the drop in prices. Ferro manganese prices were hovering around INR 108,000- INR 112,000/t exw Durgapur and Raipur.
• Domestic ferro chrome (HC60%) prices fell by INR 2,000/t. Buyers negotiated hard to pull off deals at lower levels. According to SteelMint’s assessment on 7 April, ferro chrome prices were at around INR 118,000-120,000/t exw Jajpur.
• Indian ferro silicon (70%) prices inched down by INR 3,000/t w-o-w as buyers were reluctant to buy ferro silicon at higher price levels. According to SteelMint’s assessment on 8 April, ferro silicon prices were hovering around INR 178,000-180,000/t exw Guwahati and Bhutan.

Semi-finsihed steel

• Indian semi-finished steel prices decreased sharply as per SteelMint assessment. Domestic billet prices fell by INR 2,000-3,100/t across regions, with the major drop seen in Jalna and Ramgarh. Similarly, low demand and the decline in billet prices weighed on sponge iron offers, with prices declining by INR 1,550-2,900/t.
• SAIL held an auction for 4,800 t of basic grade pig iron (in 48 units) on 5 April from the Rourkela Steel Plant (RSP) in Odisha. The entire quantity was booked at a weighted average price of INR 59,050/t exw.
• SteelMint’s assessment for Indian steel grade pig iron exports surged by a whopping 25% m-o-m to $820/t FOB east coast as of 2 April. Prices have climbed to an all-time high.
• SAIL-BSP sold 134,600 t of 60kg (9-13m) commercial rails via auctions in FY’22, as per SteelMint assessment.
• Indian sponge iron export offers fell this week by $30/t to $500/t CPT Benapole, equivalent to $530/t CFR Chittagong, Bangladesh. No fresh deals were reported amid the ongoing festive mood in Bangladesh and softening of steel prices in that country.
• Indian IF route billet export demand was dull this week and offers plummeted $35-40/t, w-o-w, to $710-715/t exw Durgapur, equivalent to $735-740/t CTP Nepal.
• Spot prices of steel grade pig iron fell by INR 1,000-2,500/t, with the major drop of INR 2,000-2,500/t being recorded in the eastern region, followed by INR 1,000-1,200/t in the central region. Decline in coal, coke and steel prices have put pressure on the domestic pig iron market.

Finished long

India’s induction furnace finished long steel market observed weak buying enquiries and limited trades this week. In most of the markets rising rebar inventories at mills and the lack of booking orders forced manufacturers to cut offers in the spot market and aoffer tradable discounts as per requirements and the movement of raw material prices.

• On a weekly basis, rebar prices declined by INR 1,000-3,700/t w-o-w, SteelMint assessment shows.
• The trade reference price of Fe 500 (10-25mm) grade rebar manufactured via the IF route was assessed at INR 58,900-59,300/t exw Raipur and INR 63,100-63,500/t exw Jalna.
•  Trade discounts given by Raipur-based heavy structural steel manufacturers are around INR 1,000/t and the trade reference price of 200mm angles stood at INR 64,700-65,100/t exw Raipur.
•  Trade discounts given by Raipur-based wire rods suppliers are hovering around INR 1,000/t and trade reference prices stood at INR 59,400-59,700/t exw Raipur and INR 59,300-59,500/t exw Durgapur for 5.5mm wire rods.

Finished flat

• The trade reference prices of flat steel products increased further this week despite slow end-user demand. Meanwhile, major mills announced a steep hike in prices of flat steel products earlier this week for the early-April sales.
• The cost push amid elevated coking coal prices in Q1FY’23 and the hope that demand would improve from the construction, automobile and white goods sectors in the coming weeks led the mills to raise list prices of flat steel products. However, in the trade segment, distributors and sellers are forced to offer at higher price levels to avoid any strain on profit margins amid continual price hikes by the steel mills since the beginning of CY’22, a few distributor sources shared with SteelMint.
• In contrast, the need-based buying pattern amid elevated prices of flat products continues to be a major concern for distributors and sellers.
• Increased competition in the overseas markets weighed on export offers from Indian steel producers. Indicative HRC export offers to the UAE are now at around $1,050-1,100/t CFR contrasted againt last week’s $1,100-1,110/t CFR for June deliveries. On a similar note, offers to Europe have also declined steeply by around $95/t and are now ranging between $1,250/t and $1,300/t CFR for June shipments. At the beginning of the preceeding week, offers were at around $1,365-1,375/t CFR.
• Comparing both export offers and domestic market prices mills still have some scope of increasing their prices to bridge the gap. Furthermore, distributors are anticipating mills to announce a hike of INR 2,000/t ($26/t) or even higher for the domestic market in the coming week for mid-April deliveries.