First quarter of financial year 2015-2016 seems to be disappointing for Indian steel companies. Falling global steel prices, rising import, slowing down export, everything made steel sector operate at negligible margins.
After the new government was formed in May 2014, Indian steel makers were very optimistic that new policies will bring in steel demand. However, over capacity in China, falling steel prices in global market, increasing supply of iron ore in sea borne market and depreciating Russian currency, steel makers unlikely to see their good days very soon.
Prices:
Raw material prices have corrected upto 35% in Q1 FY16 against Q1 FY15. For instance, NMDC’s average price of iron ore fines were recorded at INR 2990/MT in Q1 FY15, which fell to INR 1,960/MT in Q1 FY16.
Similarly, billet prices also dropped to 4-year low levels, last seen in Jan’11.
Domestic finished steel prices corrected upto 20% during Q1 FY16 against the same quarter of preceding financial year.
Export/Import: Steel and iron ore exports took a major hit in Q1 owing to falling prices in global market. On the other hand, imports kept on surging in Indian market. Although Indian government raised import duty on steel by 2.5% in first quarter,situation does not look to be improving soon.
|
Commodity |
Delivery |
Size/Grade |
Unit |
Q1 FY15 |
Q1 FY16 |
% Change |
Remarks |
|
Prices |
|||||||
|
Iron Ore |
NMDC (Chhattisgarh) |
Lumps, 6-40mm, 65% |
INR/MT |
4,470 |
3,050 |
-32 |
Excluding Royalty |
|
Iron Ore |
NMDC (Chhattisgarh) |
Fines, -10mm, 64% |
INR/MT |
2,990 |
1,960 |
-34 |
Excluding Royalty |
|
Iron Ore |
CIF,China |
Fines, 62% |
USD/MT |
105 |
58 |
-45 |
|
|
Pellets |
Ex- Barbil |
6-20mm,63% |
INR/MT |
7,350 |
4,750 |
-35 |
Basic Prices, Loaded to Wagons |
|
Coking Coal |
FOB Australia |
Premimum HCC |
USD/MT |
113 |
88 |
-22 |
|
|
Scrap |
Ex-Mumbai |
HMS 80:20 |
INR/MT |
25,900 |
20,700 |
-20 |
Basic Prices, Excise and VAT Extra |
|
Scrap |
CIF, Mumbai |
HMS 80:20 (Europe) |
USD/MT |
385 |
275 |
-29 |
|
|
Pig iron |
Ex-Durgapur |
Steel Grade |
INR/MT |
25,250 |
18,400 |
-27 |
Basic Prices, Excise and VAT Extra |
|
Pig iron |
FoB Black Sea |
Steel Grade |
USD/MT |
380 |
258 |
-32 |
|
|
Sponge Iron |
Ex- Raipur |
FeM 80 (+/-1) |
INR/MT |
22,100 |
17,000 |
-23 |
Basic Prices, Excise and VAT Extra |
|
Billet |
Ex- Mumbai |
100*100mm |
INR/MT |
33,300 |
27,800 |
-16 |
Ex- Works, Excise and VAT Extra |
|
Billet |
FOB Black Sea |
125*125mm |
USD/MT |
495 |
365 |
-26 |
|
|
Rebar |
Ex-Mumbai |
12mm |
INR/MT |
39,200 |
30,800 |
-21 |
Ex- Works, Excise and VAT Extra |
|
Wire Rod |
Ex-Raipur |
5.5mm |
INR/MT |
36,000 |
29,700 |
-18 |
Ex- Works, Excise and VAT Extra |
|
HR Coil |
Ex-Mumbai |
2.5mm, IS 2062 |
INR/MT |
43,500 |
35,500 |
-18 |
Incld Excise of 12.5% ; VAT Extra |
|
HR Coil |
CIF India |
2mm, SS 400 (China) |
USD/MT |
550 |
385 |
-30 |
|
|
HR Plates |
Ex- Works |
5-10mm |
INR/MT |
37,500 |
30,500 |
-19 |
Ex- Works, Excise and VAT Extra |
|
CR Coil |
Ex-Mumbai |
0.9mm |
INR/MT |
47,500 |
40,000 |
-16 |
Incld Excise of 12.5% ; VAT Extra |
|
SiMn |
Ex- Raipur |
60/14 |
INR/MT |
54,600 |
46,700 |
-14 |
Ex- Works, Excise and VAT Extra |
|
Production |
|||||||
|
Crude Steel |
India |
|
MnT |
20.53 |
22.5 |
10 |
|
|
Iron Ore |
India |
|
MnT |
36.6 |
38 |
4 |
Provisional Data |
|
Coal |
Coal India Ltd |
|
MnT |
108 |
121 |
12 |
Company Reports |
|
Export |
|||||||
|
Iron Ore |
India |
|
MnT |
1.96 |
0.04 |
-98 |
|
|
Long Steel |
India |
|
MnT |
0.11 |
0.1 |
-7 |
|
|
Flat Steel |
India |
|
MnT |
1.06 |
0.8 |
-25 |
|
|
SiMn |
India |
|
MnT |
0.16 |
0.16 |
0 |
|
|
FeCr |
India |
|
MnT |
0.11 |
0.11 |
0 |
|
|
FeMn |
India |
|
MnT |
0.04 |
0.02 |
-50 |
|
|
Import |
|||||||
|
Iron Ore |
India |
|
MnT |
0.09 |
2.14 |
2,241 |
|
|
Coking Coal |
India |
|
MnT |
10.86 |
11.79 |
9 |
|
|
Non- Coking Coal |
India |
|
MnT |
43.68 |
47 |
8 |
|
|
Scrap |
India |
|
MnT |
1.27 |
1.52 |
20 |
|
|
Long Steel |
India |
|
MnT |
0.11 |
0.19 |
73 |
|
|
Flat Steel |
India |
|
MnT |
1.19 |
1.86 |
56 |
|
MnT – Million Tonnes
Source: SteelMint Research
On the other hand, institutional investors feel that Indian steel demand will grow in Q3 and Q4, amid governments plan to increase spending on infrastructure projects.
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