- Mills cut list prices for early-July sales
- Trade prices drop to over one-year lows
- Decline in trade market prices slows down
Indian steel majors announced their early-July sales list prices for finished flat steel products earlier this week. Subsequent to the annoucement, prices of hot rolled coils (HRCs) (IS2062, 2.5-8mm) stand at around INR 61,000-62,000/tonne (t), while that of cold rolled coils (CRCs) (IS513 Gr O, 0.9mm) are at INR 68,000-69,000/t. Prices mentioned are on an exy-Mumbai basis, and exclude GST @ 18%.
The w-o-w decline in domestic trade prices of HRCs in the key market of Mumbai has slowed down now. This week, the price level dropped a meagre INR 300/t. However, the prices have fallen below the INR 60,500/t exy-Mumbai level as assessed on 7 April 2021.
SteelMint’s weekly benchmark price assessment for HRCs stands at around INR 59,500-60,500/t while CRC prices fell by INR 500/t to INR 67,500-68,500/t. Prices are on an exy-Mumbai basis, and exclusive of GST at 18%.
Buying interest in a few markets are showing signs of improvement. However, for others the conditions remain similar to those of the previous weeks. Buyers are still procuring on need basis and refraining from booking in bulk quantities.
Factors weighing on market sentiments
a) SteelMint’s India HRC export index drops close to early Dec’20 levels: The decline in overseas buying interest since the beginning of April 2022 has kept the Indian HRC export graph moving downwards, dropping close to $635/t FOB levels last seen in December 2020. For the current week, SteelMint’s India HRC (SAE1006) export offers were assessed at $645/t FOB east coast.
Continual decline in global HRC prices from April 2022, LC opening issues in European markets, and limited buying interest in Vietnam and the UAE dented the export volumes to these regions. Moreover, slapping of the 15% export duty on clad and/or plated non-alloyed flat steel on 21 May weighed further on the volumes. Indian mills took a two-week withdrawal from the overseas market and later started offering alloyed (boron-added) HRCs for exports. But concluding deals remained a major challenge for the Indian mills. This further pulled offers down as mills started scouting these markets with lower prices with every passing week.
Buyers remain cautious on bulk procurement
End-user industrial buyers continue to remain cautious and are booking materials on need basis only. “The persistent low volume buying by end-users has kept the distribution network from restocking in good volumes. Thus, trade activities remain slow,” shared a major distributor from western India.
Another major factor is the arrival of monsoon. Infrastructure and other construction businesses are the major consumers of flat steel products, and the seasonal showers are going to limit their activities. “Most of the infrastructure and construction activities will halt amidst the seasonal rains, which is going to weigh on the trade volumes in the near term. Although a small respite comes from the slight improvement in activities of the fabrication industry,” said a major distributor from the north.
c) Manufaturing index data shows slow growth in June
Manufacturing activities till the month of June had remained largely subdued because of the rise in input costs and inflation concerns. The manufacturing Purchasing Managers Index (PMI) grew by 53.9 points in June compared to 54.6 in May and 54.7 in April this year.
Prices of HRCs had hit an all time high of INR 78,800/t exy-Mumbai as on 6 April 2022, after which the prices have consistently moved down.
Mills opt for maintenance shutdowns
Indian steel manufacturers have opted for maintenance shutdowns a couple of months ahead of schedule because of the slow demand in both overseas and domestic markets. Thus, Indian crude steel production may drop 10-15% in the current month. Market participants opine that it might help restore the present supply-demand imbalance – and thus prices in the near term.
Leave a Reply