Trade-level prices of hot rolled coils (HRC) continued to remain under pressure for the second week in a row. These declined by INR 700/t ($8) this week. Demand remained low and trade activities were limited with particiants moving to the sidelines since the beginning of last week amid the upcoming Diwali festival.
SteelMint’s benchmark price assessment for HRCs stood at around INR 56,000-57,000/t ($677-689), down INR 700/t ($8) w-o-w. CRC prices dropped by INR 300/t ($4) w-o-w to INR 64,500-65,500/t ($779-791). Prices mentioned above are on an exy-Mumbai basis, excluding GST @ 18%.
Factors impacting domestic market prices:
Participants move to sidelines: Participants in the distribution network — both sellers and end-consumers — have been moving out of the market since the beginning of the previous week, a trend which gained momentum in the current week. “There are very few buyers in the market at present with most of them already out on holidays. Thus, activities have further slowed down compared to the previous week,” informed sources.
Moreover, restocking was mostly done in the concluding week of September as the distribution network turned active anticipating a price increase by mills. Thus, there is decent inventory in the trade channel. But limited number of active buyers in the market is weighing on offtake.
Global HRC offers under pressure: Indian buyers and sellers have been tracking the global market closely in recent times. Chinese HRC export offers have been on a continual decline since April 2022. The monthly average export prices dropped about $11/t to $579/t in August against $590/t in April. Furthermore, the prices could not sustain the $2/t m-o-m increase seen in September and dropped back to $579/t in October (last assessed on 18 October). Weak buying interest on the international platform has weighed on offer ideas of major steel exporters.
Moreover, Indian mills are facing difficulty in overseas trade amid limited buying interest for alloyed HRCs (boron added) ever since the 15% export duty on non-alloyed flat steel was imposed (from 21 May 2022). SteelMint’s India HRC (SAE1006) export index dropped by $7/t this week to $573/t FOB east coast.
Other than this, Chinese steel major Baosteel and Japan’s integrated steel major Tokyo Steel have announced a roll-over of their HRC prices this month. Whereas Vietnamese steel major Formosa reduced its HRCs (SAE1006, skinpassed) by $17/t to $593/t CIF HCMC for December and early-January sales.
Appreciation of the dollar against other currencies has also pushed the focus of exporting countries to the overseas markets.
Improved domestic availability amid export duty: Since the announcement of the export duty, the volumes of HRC exports have shown a gradual decline. Also, the maintenance runs taken on in a phased manner by most of the steel producers is done with and output is also improving. For instance, Tata Steel’s crude steel production was recorded at 4.92 mnt in Q3FY23, up from 4.81 mnt a quarter ago. However, JSW’s crude steel output was marginally down by 0.12 mnt q-o-q in Q3FY23 at 5.6 mnt, while the company’s capacity utilisation was low at 87% during the quarter.
Moreover, imports are turning viable as the prices of HRCs on the global platform are declining. India’s HRC import volumes in September stood at 151,249 t, up by 29.8% m-o-m and 32.7% y-o-y. Moreover, in January-September 2022, the volumes aggregated to 1.039 mnt, higher by 17.9% compared with the year ago period.
Near-term outlook
Prices will likely remain range-bound in the near term amid factors like rising imports, slower exports and volatile global prices.
Demand, still maintaining a decent pace in the Indian market, is a positive point amid the odds mentioned above, and will provide some support. “Most of the distribution network has deffered procurements until Diwali. Thus, it is likely that market activities will pick up post-the festive holidays,” said a few reliable sources.
Leave a Reply