Indian mills cut early July HRC offers by upto INR 5,000/t ($63/t)

Indian steel majors have announced a cut in the list prices of their benchmark products like hot rolled coils (HRC), cold rolled coils (CRC) and rebar for early July sales. Prices across these products have been officially cut by INR 3,000-5,000/tonne ($38-63/t) for the current month.

However, SteelMint understands that mills are open to and have been negotiating with customers on a one-to-one basis too where the offers may differ from those on the list.

The revised list prices of steel majors like JSW Steel, AM/NS India, JSPL and SAIL are in the range of INR 61,000-62,000/t for HRCs (2.5-8mm, IS2062), INR 68,000-69,000/t for CRC (0.9mm, IS 513 Gr O) and INR 59,000-59,500/t for rebars on exy Mumbai basis.

Reasons for the price drop?
List prices of mills have been dropping since April, propelled by various reasons:

• Mills opt for maintenance shutdowns: Mills have opted for maintenance shutdowns a couple of months ahead of schedule keeping in mind the lack of overseas and domestic demand. Thus, Indian crude steel production may drop 10-15% in the current month. The production cuts will help to restore the present supply-demand imbalance — and thus prices in the near term.
• Exports impasse continues: The 15% export duty has dealt a body blow to exports. Sales at 15% export duty is not viable, say mills. Sporadic deals of boron-added HRCs were attempted to Vietnam and the UAE but there were few takers.
• Monsoon dampens construction steel demand: Domestic demand for construction steel (long steel, plates, galvanized etc) is down because of the monsoons. Pre-monsoon buying has been completed and thus sales of such material will drop noticeably at present.
• Mills eye parity with import prices: There have been rumours of Russian mills luring Indian buyers with aggressively lowered import offers. Indian mills want to be proactive in bringing parity with the imported offers.The mills can breathe easy that their July domestic prices are in parity with Japan and Korean landed import offers.

Outlook
August could be a relatively better month compared to June-July because the rains may start receding from the northern part of India in a couple of months.

There could be possibilities of the government taking a relook at the export duties, which may spur the market.