- Mills resist price cuts, buyers stay away
- Supply constraints lend support to trade-level prices
India’s coated flat steel prices at the trade level moved within a narrow range this week amid subdued demand. Demand for colour-coated or pre-painted galvanised iron (PPGI) coils was somewhat better than that for galvanised plain (GP) coil products.
The latest weekly assessment, on 12 June, showed GP (0.8 mm/CTL, 120 gsm, IS277) coil prices at INR 64,800/t ($757/t) exy-Mumbai, down INR 200/t ($2/t) w-o-w, with offers varying in the range of INR 64,000-65,500/t ($747-765/t).
On the other hand, PPGI (0.5 mm/CTL, 90 gsm, IS14246) stood at INR 74,100/t ($865/t) exy-Mumbai, with offers at INR 73,500-75,000/t ($858-876/t). These prices exclude GST at 18% (USD 1 = INR 85.6417; INR 1 = USD 0.0116766).
Safeguard duty: Since early June, the market has been actively discussing the possibility that the Government of India (GoI) could raise the safeguard duty on steel imports from 12% to 24%. This speculation gained momentum following the US’s decision to increase its steel and aluminium import tariffs from 25% to 50%.
Recent market conversations highlight that the GoI is exploring the idea of doubling the safeguard duty amid industry participants raising concerns that Chinese exporters may be finding ways to go around existing safeguard measures. Additionally, there are worries about trade diversion, especially as Chinese steel faces higher tariffs in its key markets such as the US.
Market updates
Prices in tug-of-war amid tepid demand, mills’ resistance to cuts: Prices of coated flats are entangled in a tug-of-war, with cautious buyers opposed to high tags and resistance from producers regarding reducing the same.
“Industrial buyers in the distribution network are showing resistance to higher quotes in the market. GP prices showed signs of softening, whereas distributors refrained from reducing tags for PPGI amid better lifting for profiled roofing and cladding sheets,” informed a west-based major distributor.
Meanwhile, mills delayed announcing whether they intend to provide price support. Thus, distributors refrained from trimming quotes despite slow demand.
Supply constraints provide some stability to market: Inventories in the distribution system drained out in the last couple of weeks. Meanwhile, production-related difficulties and ongoing refractory maintenance at the blast furnace (BF) of a major private producer lent some stability to the prices despite weak market sentiments.
“Inventories in the distribution network have gradually depleted over the last couple of weeks, especially for the profiled PPGI sheets. With the early arrival of monsoons, buyers showed improved interest, but it was short-lived,” said a distributor from the north.
However, there have been no signs of support from mills despite market prices staying discounted for a prolonged duration in May, he added.
Outlook
Prices of coated flat steel are likely to stay under pressure in the near term. Meanwhile, buying interest has started receding, even for the PPGI sheets, which might further add to the pressure on price tags. Furthermore, market participants are closely monitoring the current market scenario and looking for any possibility that mills might consider providing price support this month.
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