India: Overview of Iron and Steel Industry for July 2017

There were multiple sentiments in the Indian Iron and Steel industry after GST implementation from 1st July. In this historic move by the government under “One Nation One tax” the iron and steel industry was accountable in two tax slabs i.e. raw materials like iron ore, coal and pellet in 5% slab and semis finished and finish steel was accounted in 18% slab.

In the month of July 2017 on monthly average price comparison with June, the prices of Semis finished products moved up by INR 500-1,200/MT (USD 8-18). While, finished long steels (rebar) increased by INR 200-500/MT (USD 3-8) and flat products up to INR 1,500/MT (USD 23).

The prices get supported on the grounds of strong global demand and domestically low supply for semis products.

Iron Ore: Due to monsoon season domestic iron ore purchases remained stagnant resulting in slight fall in prices. Iron ore dispatches from NMDC, Chhattisgarh fell 8% in Jul’17 (Excludes Essar dispatches). However pellet marked a sharp hike in the offers as the inquiries from Chinese steel millers increased.

Coking Coal: Active bookings by the Chinese steel makers and supply disruptions from Australia resulted rise in Coking coal prices by USD 10-15/MT.

Billets: Indian billet market were supported by strong exports due to absence of Chinese billets & significant surge in global scrap offers. The domestic billet prices surged around INR 1,000/MT & exports bookings from India increased progressively and are shipped in coming months.

Scrap: Domestic Scrap offers fell approx INR 500/MT owing to bulk imports. However, later in the month the price started to recover as there was shortage for scrap in the domestic market. It seems that domestic prices may remain strong as there is no major bookings by Indian mills for imported scrap in July due to higher offers.

Pig Iron: Pig iron offers in the domestic market skyrocketed by INR 1,000-1,500/MT in July due to strong exports, domestically less supply and sharp surge in global coking coal & scrap offers.

Neelachal Ispat (NINL), one the largest supplier in Indian and global market, have not opened domestic pig iron offers and had concluded a export tender of 30,000 MT Pig iron at around USD 313/MT FoB. The plant is expected to gain their domestic offers for Aug’17 deliveries as the private producers have already raised the offers.

Long Steel: Long steel offers remained highly volatile amid lull trades due to seasonal slowdown and rising billet offers. Interestingly, long steel exports also gained as few biggies like SAIL, RINL and JSW have concluded few export deals to South East Asian Countries .

Flat Steel: Post GST flat steel market became fragile and the flat steel producers and exported swiftly drifted their offers upwards owing to favorable demand in the global market. In domestic market the flat steel offers increased up to INR 1,500/MT owing to good demand. Various Export deals have been concluded by these biggies to Vietnam and other South East Asian Countries for August.

Note: Price comparison is done on monthly average basis July Vs June 2017.

The large scale producers are planning to further raise their offers in long and flat steel up to INR 1,000/MT supported by various factors:

– Higher export orders by these large scale producers for semis & long products.

– Shortage of material in global market due to absence of Chinese billet influencing these steel makers to get involved in exports.

– Increase in scrap and coal offers globally.

Domestic Raw material and Finished Steel Reference Prices

Indian Export Reference Prices

Comparison done on Monthly Average Basis
Source: SteelMint Research