India: Primary mills keep HRC, CRC list prices unchanged for Nov sales even as trade prices decline

The major steel producers are indicating a roll-over of HRC and CRC list prices compared in November compared with with early-October sales. However, trade-level prices continued to remain under pressure amid slower resumption of market activities after the festive holidays.

List prices for early-November sales from major mills:

• AMNS India: Post announcement list price of HRC (IS2062, 2.5-8mm) continues to hover at INR 57,750-58,000/t, while that for CRC (IS513 Gr O, 0.9mm) at INR 66,000/t.
• Tata Steel Ltd: Post announcement list price of HRC stands unchanged at INR 58,500/t, while that for CRC at INR 66,500/t.
• Few sources indicated JSW to have announced a roll over of price, however the same could not be confirmed. List price of HRC was around INR 58,000/t for October sales.
• Prices mentioned are on an exy-Mumbai basis, excluding GST @ 18%. Others m ills are likely to follow the suit.

Why are mills keeping prices unchanged?

1. Market fails to absorb price hike: Recalling the price announcement for October sales, the mills had taken a price hike of up to INR 1,000/t. List prices of HRC were raised to INR 57,000-58,000/t exy-Mumbai. However, the trade level prices of HRC declined from INR 57,500/t at the beginning of October to INR 56,000-56,500/t as per the recent assessment on 02 Nov’22.

2. Global dynamics raise concerns over imports: Prices on the global platform are under pressure since May. For instance, on a monthly average basis, Chinese HRC (SS400) export offers have dropped to $584/t FOB China as against $901/t FOB in April. The recent assessment on 1 November showed the same having dropped further to $570/t FOB.

Furthermore, offers from the countries having Free Trade Agreement (FTA) with India like South Korea have dropped to $520/t FOB, and that from Japan is hovering around $510/t FOB at present. Thus, distribution network participants are growing concerned about the inflow of low priced imported HRCs in the market.

3. Exports continue to remain slow: SteelMint’s India HRC (SAE1006, boron-added) export index remained rangebound at $573/t FOB east coast India for the second consecutive week. There were no firm offers from Indian mills for the past couple of weeks. Buying interest in the overseas markets was also lackluster. Indian steel exports dropped a steep 53% in April-September 2022 or first half of financial year 2022-23 (H1FY23) to 5 million tonnes (mnt) against almost 11 mnt seen in the same period in H1FY22, reveals data maintained with SteelMint.

4. Pent-up demand: The demand in the domestic market has remained lackluster for most of the CY 2022 over price concerns. Trade level HRC price had shown continual increase from mid-January (INR 66,900/t exy-Mumbai) and were further fueled by the Russia-Ukraine political tension since late February. The prices kept rising till early-April to the peak of INR 78,800/t exy-Mumbai. However, the prices came under pressure over limited buying interest among end-industrial consumers. Another hit came from the annonucement of 15% export duty on non-alloyed flat steel products on 21 May’22 which stalled the exports from India.

The infrastructure and construction industries consume about 60% of steel. Meanwhile, with the decline in prices over the past few months some of the pent-up demand has started sprouting giving the market a slow start. For instance, Larsen and Toubro Ltd’s the order inflow stood around INR 346 billion in Q2FY23 as against INR 240 billion a quarter ago, an increase of 44%. The same was up by 73% against Q2FY22’s figure of INR 200 billion.

Furthermore, it is expected that National Highway (NH) construction activities shall be expedited as it had been slow during the April-September 2022 period. During the period a stretch of 3,559 km of NHs were laid down, which is less than 3,824 kms constructed a year ago, as per data released by Ministry of Road Transport and Highways (MoRTH). Meawhile, the ministry looks forward to the construction of 12,000 km in FY2023 compared with 10,457 km laid down in FY2022.

Trade level prices drop w-o-w: Trade-level prices of HRC declined marginally by INR 200/t whereas those of CRC dropped by a steeper INR 1,700/t from the previous week. SteelMint’s benchmark assessment for HRC (IS2062, 2.5-8mm) was assessed around INR 56,000-56,500/t, while those of CRC (IS513 Gr O, 0.9mm) were around INR 63,000-64,000/t as on 02 Nov’22. Prices mentioned above are exy-Mumbai, excluding GST at 18%.