Weekly round-up: Indian steel market remains dull amid subdued demand

The domestic steel market remained dull during week 42 ( 10 -15 October 2022). Semi-finished steel prices fell in the range of INR 100-1,900/tonne (t).

Domestic induction furnace finished long steel offers witnessed a downtrend. Offers fell by INR 200-1,700/t w-o-w. The finished flats market witnessed a mixed trend and trade reference prices for finished flats fluctuated by INR 100-900/t for hot rolled coils (HRCs) and cold rolled coils (CRCs).

Iron ore and pellets

• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,150/t, down by INR 250/t compared to the last assessment on 11 October 2022. The reduction in offers by a couple of pellet players and subdued steel demand in secondary players kept pellet bids on the lower side.
• State PSU miner OMC has scheduled an iron ore auction on 19 October. Around 0.752 mnt of lump ore and 1.087 mnt of fines will go under the hammer. The base price of the auction is yet to be disclosed. Out of 1.739 mnt of iron ore offered last month, 1.115 mnt (64%) received bids.
• The Government of Chhattisgarh has identified three mineral blocks for electronic auction and invited bids for the purpose of grant of Composite Licence (CL) in accordance with the Mineral (Auction) Rules, 2015. The government has issued a tender notice for two iron ore blocks, one in the Kabirdham district and the other in Rajnandgaon.
• Steel Authority of India Ltd (SAIL) put up 40,000 t of iron ore tailings (Fe 58%-indicative) for sale via auction from its Barsua mines in Odisha on 13 October. The entire quantity received bids at INR 2,175/t (ex-mines, including royalty, DMF, NMET, and extra premium). The same grade ore was last sold on 23 September at INR 2,275/t (including royalty, DMF, and extra premium).

Coal

• Australian hard-coking coal prices rose by $13/t w-o-w to $287/t FOB and $308/t CNF India. The prices are being supported by wet weather in Australia and chances of a strike by coal mine workers over working conditions and job security reasons.
• Portside RB3 (4800 NAR) prices remained stable at INR 14,300/t at Vizag Port amid small parcel trade by sponge iron manufacturers.
• South African RB1 (6000 NAR) prices also remained in a tight range of $252/t FOB amid limited European enquiries. The Transnet union workers’ strike had no major impact on prices so far amid stable coal loading from RBCT Port and sufficient coal stockpile at the port.

Ferrous scrap

• India’s containerised ferrous scrap remained volatile as the market witnessed limited trading activities throughout the week. SteelMint heard one Japanese-origin cargo containing 9,510 tonnes of shredded scrap is expected to arrive at Chennai Port during October-end. Mills are also holding back booking owing to the national currency’s depreciation against the dollar.
• Additionally, steelmakers are holding fresh bookings, owing to the ongoing festive season when construction activities become slow. But, already, booked bulk cargoes are arriving at the port and buyers continue their bulk bookings giving containers the miss.
• SteelMint’s assessment of shredded scrap in India stood at $460/t CFR Nhava Sheva.

Ferro alloys

• In SteelMint’s assessment on 14 October, Indian silico manganese (60-14) prices inched up by 2% w-o-w to INR 73,100/t ex-Durgapur, INR 72,500/t ex-Vizag, and INR 73,600/t ex-Raipur w-o-w. Increasing domestic demand for manganese alloys led to rising silico manganese prices, forcing many mills to reduce production in order to recover production costs.
• As on 14 October, Indian ferro manganese (HC70%) prices inched up by 1% w-o-w to INR 74,500/t ex-Durgapur and to INR 75,000/t ex-Raipur. Special steels and stainless steels continued to be in demand, driving up the prices of ferro manganese.
• According to SteelMint assessment on 14 October, ferro chrome producers were offering HC60% grade at around INR 99,400/t on exw-basis in Odisha. Ferro chrome prices rose by 3% amid good demand from export and domestic markets. Meanwhile, Vedanta’s ferro chrome auction concluded on 10 October at 5% premium from the base prices.
• Prices for ferro silicon decreased as the market saw moderate demand and some buyers were on hold, waiting for further price drops. According to SteelMint’s assessment on 14 October, Bhutan’s producers started offering at INR 134,000/t and Guwahati followed suit.

Semi-finished

Indian semis trade slowed down this week as prices slumped by INR 100-1,900/t amid lower inquiries for finished products in major markets.

Domestic billet prices decreased by INR 800-1,900/t. Similarly, sponge manufacturers, being under pressure, reduced their offers by INR 100-800/t, w-o-w.

• Durgapur Steel Plant held an auction for 1,500 t of steel grade pig iron on 14 October. The entire quantity was booked at an average price of INR 43,100/t exw.
• Rourkela Steel Plant (SAIL) concluded an auction for 700 t of steel grade pig iron on 14 October at an average price of INR 44,150/t exw.
• Tata Metaliks reduced basic pig iron prices by INR 1,400/t and foundry grade prices by INR 1,700/t for October orders. Fresh offers for foundry grade are at INR 48,500/t and for basic grade (Si 1.0-1.5%) at INR 45,500/t exw-Kharagpur.
• SAIL’s Bhilai Steel Plant conducted an auction for 3,000 t of steel grade pig iron on 10 October. The entire quantity was booked at an average price of INR 43,500/t exw.
• Sponge iron export price assessment remains firm at $450/t CPT Nepal, (FeM 80%, lumps 70%, fines 30%). Only about 1,250 t of deals were concluded this week.
• Spot steel grade pig iron prices fell slightly by INR 100-500/t in central and eastern regions. Indian pig iron prices remained under pressure on account of improved supply in the spot market and falling steel prices.

Finished longs

India’s finished long steel market through the induction furnace route observed subdued buying enquiries throughout the week which hampered transactions across regions. Uncertain market trends and high fluctuations in raw material prices (sponge iron and billet) resulted in lower demand for rebar, structural and wire steel as buyers turned cautious on taking positions to procure material in this scenario. Selling pressure was seen in the market due to gradually rising inventories at mills. Such factors pressured manufacturers to lower their offers or give trade discounts, tracking raw material price movements.

• On a weekly basis, rebar prices plunged by INR 200-1,700/t across regions while a few markets like in Chennai and Mumbai remained stable w-o-w basis, as SteelMint assessment shows.
• The trade reference price of Fe 500 grade rebar manufactured via the IF route for 10-25 mm size was assessed at INR 50,700-51,100/t exw-Raipur, and at INR 54,300-54,700/t exw-Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers stood around at INR 1,500-1,800/t and trade reference prices of 200-mm angles stood at INR 57,100-57,500/t exw-Raipur.
• Trade discounts given by Raipur- based steel wire rod suppliers stood at around INR 1,000/t and trade reference prices at INR 51,000-51,500/t exw-Raipur and at INR 50,800-51,000/t exw-Durgapur, for size 5.5 mm.
• This week trade level prices witnessed mixed trends across markets amid moderate demand. Moreover, limited restocking activities are being done by market participants in the distribution network to maintain moderate inventory levels.
• Restocking is likely to remain lukewarm in next week as end consumers are withholding their purchases on the back of inflationary pressure.
• SteelMint’s weekly price of rebar (12-32mm, BF-route, IS 1786, Fe500D) dropped by INR 300/t ($4/t) w-o-w to around INR 55,500-56,500/t ($673-685/t), on exy-Mumbai basis, exclusive of GST at 18%.

Finished flats

• Domestic trade-level finished flat steel prices showed mixed trends this week, rising in a few markets while remaining range-bound or dropping in others.
• The downward pressure was more on hot-rolled and cold-rolled coils which witnessed a drop of INR 500/t and INR 600/t respectively in the Mumbai market. As in previous years, this year too, buyers have started moving to the sidelines 3-4 days ahead of Diwali, informed sources.
• However, expectations of a ban on construction and vehicle movement in the northern provinces from end-October to December have kept the market momentum going in the Faridabad and Delhi/NCR markets. This has helped in maintaining the previous week’s price levels in the region.
• On the other hand, HR-plates and coated flat steel products have remained largely rangebound.
• “A few industrial buyers are still active in procuring ahead of the festival days. However, flat steel prices are anticipated to remain under pressure while clarity on price direction shall come as market activities pick up again post-Diwali,” informed reliable distribution network partcipants.
• On the exports front, SteelMint’s weekly assessment for HRC (SAE1006) export index dropped by $3/t to $580/t FOB east coast. There was limited buying interest as alloyed HRCs were offered and competitive price quotes from other exporting countries weighed on the price indications from Indian mills. Japanese and South Korean mills are now quoting to Southeast Asian countries as low as $600/t CFR, which has made Indian mills reconsider their levels of $620-630/t CFR Vietnam floated last week.