Indian CRC trade prices declined further this week, by around INR 1,000-2,000/tonne (t) in the key markets, as assessed by SteelMint. Sluggish demand from the automotive industry amid the global chip shortage crisis, along with low end-user demand in the trade segment, resulted in a fall in prices.
SteelMint’s benchmark price assessment
- The HRC (2.5-8 mm IS 2062) price stands at around INR 65,000-65,500/t (exy-Mumbai), down INR 200/t w-o-w.
- CRC (IS 513 Gr O, 0.9mm) is being traded at INR 72,000-73,000/t (exy-Mumbai), down INR 800/t on the week.
- Prices mentioned above are exclusive of GST @18%.
The spread between HRC and CRC prices is gradually decreasing on the back of subdued demand. For instance, the current week’s gap stands at INR 7,200/t while at the beginning of Sept’21, it was around INR 10,000/t. The price spread was around INR 4,000-5,000/t prior to the Covid-19 outbreak in Dec ’19.
Factors weighing down on market prices
1. SteelMint’s Odisha iron ore fines index down: Iron ore prices in the country are under pressure owing to low domestic demand and falling pellet prices. Meanwhile, global iron ore prices are also falling sharply. However, yesterday, Fe 62% fines prices recovered a bit post-the Chinese holiday.
SteelMint’s weekly Odisha iron ore fines (Fe 62%) index fell sharply by INR 650/t to INR 5,750/t (ex-mine, including royalty, DMF and NMET), as assessed on 18 Sept’21, marking the fourth consecutive weekly decline.
2. Disparity between mill and trade segment prices: The trade reference prices continue to remain discounted against what the major private steel producers are offering for Sept’21 deliveries. Private steel majors have their effective list pricing for HRC at INR 66,000-67,000/t exy-Mumbai and CRC at INR 76,000-77,000/t exy-Mumbai for the current month deliveries.
“The disparity in mill and market prices is keeping the procurements slow from distributors and dealers as well, as they are also concerned about the continual decline in trade market prices,” a major distributor from north India said.
3. Sluggish demand from white goods sector: Consumer durable firms have suffered another round of disruption because of the second Covid wave. Revenues of cooling product manufacturers saw a 24% decline for the June quarter on a compound annual growth rate (CAGR) basis over two years, according to data from HDFC Securities Ltd. The two-year CAGR of electrical consumer durables (ECD) sales was a negative 13% during the June quarter. The sector is pinning hopes on pent-up demand and the festive season to push for sales growth.
Outlook
Major distributors and dealers are looking for price support from mills as market prices are well below what they are procuring at. Meanwhile, there has been no buzz on what the mills are up to for the Oct price announcement. “Steel manufacturers are talking of visibility of demand in the near future. But ‘when?’ is the real question,” said a major distributor from western India.
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