Indian flat steel producers have been curtailing their production since mid-July effectively reducing the pace of the decline in the trade level HRC and CRC prices. This week, prices have dropped marginally by up to INR 600/t in the Mumbai market.
SteelMint’s benchmark price assessment for HRC (IS2062, 2.5-8mm) fell by INR 100/t ($5/t) w-o-w at INR 57,000-57,500/t, while CRC (IS513 Gr O, 0.9mm) prices are at INR 66,500-67,500/t, down by INR 600/t. Prices are exy-Mumbai, excluding GST at 18%.
Factors supporting HRC/CRC prices –
1. Supply constraints: The decline in trade level prices also slowed because of the supply side constraints over the past month. Limited overseas demand amid alloyed HRC (boron added) on offer and the slow recovery in the domestic market prompted mills to opt for maintenance shutdowns in a phased manner. Thus, since mid-July, mills have been operating at reduced capacity levels and planning maintenances months ahead of their regular schedule.
Meanwhile, buying interest in the domestic market gradually started improving since mid-July. Thus, the coinciding of these events disrupted the demand-supply balance, lending some support to prices lately.
2. Improved demand: Domestic market demand for flat steel has remained weak for the past few months. However, the signs of demand recovery started to show by mid-July as the mills announced their list prices for HRC and CRC for early-July sales lower compared with early-May sales. The list prices for HRC and CRC were further lowered for early-August sales.
The early-August sales prices for HRC (IS2062, 2.5-8mm) were in the range of INR 58,000-58,500/t and CRC (IS513 Gr O, 0.9mm) at INR 65,350-66,500/t, depending upon mills. In July, HRC prices were set at INR 61,000-62,000/t and CRC at INR 68,000-69,000/t. All prices are on an exy-Mumbai basis, excluding GST @ 18%.
This decline in prices attracted demand from the infrastructure and construction businesses along with some of the medium-sized and unregularised end-user industrial buyers. “Demand is still slow, but shall recover around early September as market activities pick up before the festive season,” SteelMint learned from reliable sources.
Meanwhile, India’s manufacturing Purchasing Managers Index (PMI) showed a steep recovery in July 2022 to 56.4 points compared with June’s 53.9. This is the highest in the past eight months. The input cost in the manufacturing sector came down amid easing inflationary pressure in July.
3. Export offers from India move up : SteelMint’s India HRC export index also showed an increase of $18/t this week. The index was evaluated at $583/t FOB east coast India this week against the previous week’s $565/t FOB.
The recent increase in the Chinese SHFE futures pushed HRC export offers upwards on the global platform. China’s HRC (SS400) export offer rose by $7/t w-o-w to $612/t FOB, pushing Indian steel makers to raise their offers too. Indian boron added HRC (SAE1006) export offers to Vietnam increased by $30/t w-o-w to $620-630/t CFR, while to the UAE by $10/t to $630-640/t CFR.
A few participants are of the opinon that an increase in offers on the global platform might help boost the domestic market sentiments.
Near-term outlook
Prices are most likely to stabilise in the upcoming weeks amid the dual impact of improving demand and low output from mills. Along with these, prices on the global platform are showing an upward momentum.
Meanwhile, market participants opine that the domestic trade level prices are close to the bottom and thus there is not much scope for any steep decline in prices. “This month demand is slightly better than July, and sales are happening at the current price levels majorly because the decline in prices have slowed and supplies are tight,” informed a few distributors from north and western regions.
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