- Trade market prices just above early April 2021 levels
- Low buying activities weigh on prices
- Chinese heavy plate (SS400) FOB prices match early April 2021 levels
Trade segment prices of hot-rolled (HR) plates continued to decline in June, hitting over-a-one-year-low mark. Inquiries in low volumes, active bargaining and external factors like continual decline in global plate prices also weighed on prices in the domestic market.
SteelMint’s assessment for HR-plates (E250, 5-10mm) declined by INR 300/t ( $4/t) w-o-w to INR 61,000-62,000/t ($779-792/t) exy-Mumbai this week. The prices for plates (E250, 20-40mm) were assessed at INR 64,000-65,000/t ($817-830/t) exy-Mumbai, down by INR 600/t ($8/t) w-o-w. Mentioned prices are basic, and exclude GST at 18%
Demand down, buyers procure in low volumes
Demand has turned slow because of various factors. Both end-buyers and distribution channel partners are trying to avoid building up inventories amid the continual decline in prices.
“Buyers are procuring in low volumes. Hence, the quantities getting booked are spread over a longer duration. Also, this is providing more avenues to buyers to bargain, in turn, weighing on prices,” shared major distributors from northern India.
Meanwhile, the stockists and other trade channel participants are also not interested in stocking materials in bulk quantities in the market. The main concern remains the consistent drop in trade market prices.
“A few distributors and other sellers holding good level of inventories had started selling at lower price levels with the buyers starting to delay their procurements. This started the chain of decline in prices, and buyers looking to avoid losses started buying on need basis, which in turn led to panic sales in the market,” SteelMint learnt from reliable trade sources in the western region.
Moreover, distribution channel participants also became cautious with the levy of the export duty on non-alloyed flat steel products in late May. The brief pause in export activities after the announcement and difficulties in concluding deals with overseas buyers also weighed on the domestic market sentiments.
Decline in raw material prices
Decline in raw material prices such as iron ore and coking coal is another factor keeping buyers and sellers in the distribution network concerned.
SteelMint’s benchmark Odisha iron ore fines (Fe62%) index has slipped to INR 3,150/tonne (t) ex-mines (including royalty and other statutory cesses) on 18 June 2022. This is nearly the lowest level in two years. Furthermore, against the February-March levels, the index has fallen from over INR 6,000/t.
Also, Australian premium hard coking coal (HCC), prices assessed at $368/t FOB on 13 June, have dropped steeply in the past 15-20 days. Prices have come down from the peak levels of $670/t in late-March. On a monthly comparison, these have declined steeply by around 30% from $525/t in May. Also, the imported Australian premium HCC prices have fallen to $397/t CNF India from $554/t a month back.
Decline in global plate prices weighs on market sentiments
The softening of plate prices in the global market continues to weigh on sentiments. The Chinese heavy plates (SS400) export offers have further declined to $730-760/t FOB basis this week, contrasted against the previous week’s $770-780/t FOB levels. The prices have come at par with the levels last seen in April 2021.
The decline in domestic prices of HRCs, buyers moving to the sidelines, and the volatile futures weighed on prices in both domestic and overseas markets. Since April 2022, overseas buyers have adopted a wait-and-watch approach.
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