Major Indian plate producers have reduced their hot-rolled (HR) plate prices by around INR 3,000/tonne (t) for early-December sales earlier this week. Buying interest in the domestic traders’ market has remained slow since the festive holidays in late October. Whereas volatile global prices have made buyers cautious which is weighing on domestic trade level prices.
Subsequent to the price announcement, HR plate (E250, 20-40mm) list prices for December sales-
- SAIL: INR 58,000/t
- AM/NS India: INR 60,000/t
- JSPL: INR 62,500/t
- Prices mentioned are on an ex-Mumbai basis, exclusive of GST @ 18%.
Why have mills reduced prices for December sales?
1. Domestic trade prices fall to nearly a 1.5-year low: Domestic trade prices of HR plates have dropped to a one and half-year low. SteelMint’s assessment for HR plate (E250, 5-10mm) dropped by INR 1,100/t to INR 55,300/t as on 8 December 2022. The same levels were last seen during early-April 2021, as per SteelMint records.
Also, the assessment for HR plates (E250, 20-40mm) fell by INR 1,200/t to INR 58,700/t for the current week. Prices have dropped below the levels of INR 66,000/t as on 12 August 2021 when the assessment was onboarded.
“Buyers in the trade market are currently procuring as per urgent requirement amid declining domestic trade reference prices and volatile global prices,” informed a few western India-based major distributors.
2. Raw material prices show slower recovery: Prices of key steel making raw materials – coking coal and iron ore fines – which had witnessed steeper declines in the first half of 2022 have remained slow in recovering. For instance, on a monthly average basis, SteelMint’s Odisha iron ore fines Fe 63% index stood at INR 3,900/t ex-mines in November 2022, while the same was around INR 6,750/t ex-mines in March before declining steeply.
Similarly, the premium HCC, Australian origin coking coal prices stood at $307/t CNF India on a monthly average basis in November. Prices are well below the levels of $627/t CNF seen in March.
3. Lukewarm end-user demand: At the traders’ market level, HR plate buyers turned cautious post the festive holidays in late October. The performance of a few end-user industries was slack which is one of the reasons behind slow demand. For instance, there was an addition of 461 kms to the highway network in October 2022, as per data from the Ministry of Road Transport and Highways (MoRTH). This is lower as compared to the construction of 687 kms of highways in September 2022 and 626 kms in October 2021. Also, this is the second slowest addition in FY23 after 419 kms constructed in August 2022.
Meanwhile, India’s manufacturing indices also showed lackluster performance. The Index of Industrial Production (IIP) stood at 134.3 in September 2022, up by a marginal 1.8% against the previous month. However, the same was up by 4.3% against September 2021 because of the low base effect last year as the diversion of oxygen for medical aids had just started easing.
India’s Manufacturing Purchasing Managers Index (PMI) is also on a slower recovery path. PMI grew with 55.7 points in November, up by a mere 0.7% against 55.3 in October this year. In FY23, the PMI has grown with points exceeding 56 only in the two months of July (56.4) and August (56.2), while in June (53.9), it was the slowest. This also indicates slowing of demand in the previous few months.
4. HRC/plate exports down 66% y-o-y in H1FY23: Export volumes have dropped in H1FY23 with the levy of 15% export tax on non-alloyed clad or plated flat steel products on 21 May 2022. In (April-September) H1, the volumes aggregated to 1.28 mnt, steeply down by 66.1% contrasted against 3.97 mnt in the corresponding period last year.
Also, the export volumes have remained below the 100,000 t-mark in the July-September quarter, as per customs data maintained with SteelMint. October and November export data are yet to be received. A point to note here is that the government has removed the export duty with effect from 19 November 2022.
Leave a Reply