The trade level prices of hot-rolled (HR) plates declined steeply by around INR 3,000/t ($39/t) in the key Indian markets this week on the back of sluggish demand and need-based procurement by end-user industries as mills keep prices elevated. SteelMint’s assessment for HR-plates (E250, 5-10mm) decreased by INR 3,000/t ($39/t) to INR 72,000-73,000t ($942-955/t) exy-Mumbai. Prices are basic, excluding GST at 18%.
Factors weighing on HR plate prices-
1. Sharp hike in plate prices by mills: Steel mills have been quite aggressive in increasing prices in the past few months, which has weighed on the buying sentiments in the domestic market. Furthermore, the mills like JSPL announced a steep INR 11,000/t hike for April sales, pushing up plate (E250, 20-40mm) prices to INR 95,000/t ex-plant, equivalent to INR 98,500/t exy-Mumbai. AMNS India announced INR 16,000/t increase, sending list prices to INR 95,000-95,500/t exy-Mumbai levels. Prices mentioned are exclusive of GST @18%. Such a hike is not easy to be absorbed in the market, SteelMint learnt from most of the channel partners.
2. Global plate export offers range-bound: The export offers for plates, on the other hand, have shown a little improvement this week. For instance, export offers of Chinese heavy plate (SS400) widened to $860-936/t FOB China, which was around $875-900/t FOB a week ago on improved buying in the Southeast Asian countries and South America. However, it is also to be noted that prices had declined by $5-10/t in the previous week, when demand had slowed down and concerns emerged around improved supplies with the opening of the major hub of Tangshan.
3. Slow construction activities weigh on demand: The momentum of activities has slowed in both infrastructure and residential segments amid an elevation in prices of raw materials including steel. For instance, the speed of highway construction in CY22 was around 29 km per day, contrasted against 37 km per day in CY21. Moreover, there have been a few protests by the consortium of developers/contractors against the steeply rising prices of steel and other materials in the northern region of India. This has also weighed on demand from the other allied sectors such as heavy machinery and OEMs.
Near term outlook
The emergence of concerns around Line of Credit opening capacity of buyers in European countries at the end-March has slowed down demand for HR Plates and HRC. It must be noted that mills were offering plates (S235, 20-40mm) for exports around $1,300/t CFR Europe towards mid-March, just before withdrawing offers. Thus, major manufacturers, as they are decently booked until May 2022, have not offered plates for exports in the overseas markets since mid-March. Also, buyers in the Middle East have shifted their preference to domestic products. Thus, there is a stagnation in the movement of materials. This is further weighing on the buying sentiments in the domestic market, as buyers have moved to sidelines and are expecting price revision in the near term.
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