India’s steel index stable for 2nd consecutive week

• Exports fillip keeps flats supported
• Project segment demand in Q4 almost met
• Emerging billets demand from Turkey to benefit India

Morning Brief: For the second week in a row, the India Steel Composite Index has remained stable. It ended down by a negligible 0.1% for the week ending 25 February, 2023 at 156.50 points (156.60 points in the previous week).

The other two sub-indices also remained stable. The India Flat Steel Composite Index edged up a minor 0.87% to 156.60 (155.20) while the India Long Steel dipped a slight 0.90% to 156.40 (157.90) points w-o-w.

Factors keeping the index stable

Flats

Moderately large cargo booked for EU: Exports received a recent fillip when a fairly large parcel got booked to Europe. A private Indian steel major booked 40,000-50,000 t of hot rolled coils (HRCs) at $790-800/t CFR European Union (EU), for April 2023 shipment. Additionally, fresh offers for HRCs were floated at an even higher range of $800-810/t CFR Antwerp. EU’s buying interest in imported HRCs seems to be improving amid elevated domestic prices. These sentiments are keeping flats supported. Earlier in the month, most HRC consignments had been comparatively smaller.

Restocking rush: Mills opted for an interim hike of INR 500/t in HRCs while the trade market prices increased by INR 1,000/t, this week again to stand at INR 59,300/t. The hike was possibly on expectation of further price increases. “Global prices are going up, and are at an 8-month high, which may give mills a reason to further raise prices in March. Based on these premises, there was a restocking rush in the trade segment – which allowed prices to move up,” said a source. Ex-Mumbai HRC prices are up by around INR 1,000/t.

Coking coal prices trend northward: Prices of coking coal have seen a northward march since January 2023. The premium hard variety is touching $383/t CFR India, rising by $56/t m-o-m in February and by $106/t since December, 2022. China’s aggressive procurement of Australian coking coal is responsible for the price push along with supply issues too. The cost push is also adding to the price rise.

Longs

Slowdown in buying from project segment: Trade segment prices observed a negligible correction since demand from projects is expected to remain lukewarm for the rest of the quarter as most of the procurement planned for Q4 has been completed. “Most infra developers have met their quota for Q4. Thus, demand for the remaining quarter will remain lukewarm,” said a source. Hence, longs prices corrected slightly by about INR 500/t.

“The market is stable – neither bullish nor bearish,” said a source, adding that Turkey demand can have a positive impact on prices. For instance, a mill recently floated a billets export tender which fetched bids of $570-580/t although the company’s expectations were $590/t levels. The tender is yet to be concluded.

Outlook
The market expects longs prices to rebound soon on the back of emerging demand from Turkey. Scrap prices have already started climbing up since the quake-shaken country has resumed buying. “There are expectations that demand for billets will emerge – where India may stand to gain by becoming a supplier,” observed a source.

In flats, meanwhile, Indian mills may have to compete with Vietnam which has been floating competitive offers for the EU market.

The India Steel Composite Index
The India Steel Composite Index is assessed on a weekly basis: every Friday at 18:30 IST, as per the weighted average prices based on manufacturing capacity and production.

SteelMint considers the Composite Index with the base year being 3 January 2020 (financial year 2019-2020) and the base value as 100. The Composite Index does not give the absolute price but a trend of the market. The Indian steel industry is broadly classified into the BF-BOF and the electric/induction furnace routes. Keeping this broad classification in view, SteelMint proposes to release the Composite Index by considering both production routes by manufacturing capacity and the production weighted method to compute the index for India. For details click to view the methodology document.