Domestic trade market prices of hot rolled coils (HRC) and cold rolled coils (CRC) continued to move down for the seventh straight week due to slow trading activities.
SteelMint’s benchmark price assessment for HRC stood at INR 65,500-66,500/t ($844-857/t), down steeply by 3,200/t ($41/t) w-o-w, while CRC prices fell by INR 3,500/t ($45/t) to INR 75,500-76,500/t ($973-986/t). Prices are basic excluding GST at 18% on exy-Mumbai basis.
The major sentiment dampners have been the slow buying interest among flat steel consuming end-user industries and the continual decline in prices in the domestic and overseas markets. Moreover, the 15% export duty announced on finished steel products including HRC late last Saturday has stoked bearish sentiments in the market.
Mills withdraw from overseas markets
Subsequent to the export duty slapped on clad, plated or coated flat rolled products of iron or non-alloy steel of 600mm in width or more, Indian steel majors withdrew their offers from the export markets. SteelMint’s India HRC (SAE1006) export index assessed last week at $821/t FOB east coast has fallen sharply by $244/t (23%) compared to $1,065/t FOB in end-Mar’22.
The offers are on a continual decline with the cooling down of buying interest amidst LC opeining issues in the EU and emerging bid-offer disparities in the Middle Eastern markets.
Domestic market sources are of the view that mills, after withdrawing from the overseas markets, will come under selling pressure in the already slow domestic market. This would weigh on prices of flat steel products in the coming weeks.
End-user demand wilts
All the industrial buyers have retreated to the sidelines in anticipation of a further decline in prices in the coming weeks. The already slow procurement cycle stalled this week as everyone is now waiting for the mills to revise prices downwards.
Notably, HRC prices touched new highs this year at INR 78,800/t ($1,015/t) exy-Mumbai in early April, surpassing the previous peak of INR 72,500/t ($934/t) exy-Mumbai in late Oct’21. Prices mentioned don’t include GST at 18%. This is also a factor that has weighed on buying interest lately.
Furthermore, the tussle continues for auto contracts to be signed on a half-yearly or quarterly basis between the steel mills and the automobile industry for flat steel and it is expected that the contracts could get delayed because of the recent export duty announcement.
Even the market indices show slow progression since the beginning of 2022. The Index of Industial Production (IIP) for Mar’22 grew by a mere 1.9% y-o-y after growing by 1.5% y-o-y in the previous two months, as per data from the Ministry of Statistics and Programme Implementation (MoSPI).
IIP for the manufacturing sector has shown marginal growth of 0.9% y-o-y in March, compared with 0.5% y-o-y in February. However, it was down from the 1.3% y-o-y increase observed in January.
“The already slow demand in the past seven weeks has dragged the prices down significantly from the levels in early April. There are very few buyers at present in the market, as most of them have been postponing their purchases due to the continual decline in prices and anticipating further decline,” a western-India based distributor source told SteelMint.
Near-term outlook: Trade market activities may continue to remain slow as market participants await price revision announcements by major steel producers. “Mills are likely to reduce prices, but we are waiting to see how much would be the quantum of decline,” a trader source said. The mills are likely to make an announcement in the first week of June, however have avoided from commenting anything on the pricing prospects.
Leave a Reply