Trade level prices of hot-rolled (HR) plate saw a marginal decline this week, after having remained firm in the preceding couple of weeks. The buying sentiments weakened this week, although marginally improved compared to the past few months. The cautious approach of domestic buyers, and downtrend in global plate prices continue to weigh on market sentiments.
SteelMint’s weekly assessment for HR plates (E250, 5-10mm) edged down to INR 60,000-61,000/t ($751-764/t) exy-Mumbai, as against last week’s INR 60,500-61,500/t ($757-770/t) exy-Mumbai.
Plates (E250, 20-40mm) prices were assessed at INR 62,500-63,500/t ($782-795/t) exy-Mumbai this week, compared to INR 63,500-64,500/t ($795-807/t) exy-Mumbai a week ago. Mentioned prices are basic, and exclude GST at 18%.
Major factors impacting market sentiments
1. Raw material prices
The prices of imported coking coal have been on a gradual decline since the beginning of the month. For instance, the Australian premium hard coking coal (HCC) prices have dropped by $76/t to $253/t CNF Paradip as assessed on 22 July, contrasted against $329/t CNF on 1 July.
Also, on a weekly average basis, the same has dropped by about $15/t from $270/t CNF last week to $255/t CNF this week with one working day still in hand.
For iron ore, India’s largest merchant iron ore mining company, NMDC, slashed prices of lump ore by up to INR 600/t ($8) and fines by INR 500/t ($6/t), effective from 12 July. The prices fixed for lump iron ore (65.5%, 6-40mm) stand at INR 3,900/t ($49/t), DR CLO (Fe 67%, 10-40mm) at INR 4,680/t ($59/t) and iron fines (64%-10mm) at INR 2,810/t ($35/t) FoR, excluding royalty, DMF and NMET.
However, SteelMint’s benchmark Odisha iron ore fines (Fe63%) index remains firm w-o-w at INR 3,900/t ($49/t) ex-mines (including royalty and other statutory cesses) on 16 July 2022. The prices had edged up by INR 400/t ($5/t) in the first couple of weeks this month on hikes in sponge iron and pellet prices, and supply tightness with the arrival of monsoons. However, falling raw material prices are moving buyers to the sidelines, waiting for further price falls. Falling raw material prices will obviously have an impact on prices next month.
2. Decline in global plate prices weighs on sentiments
The domestic buyers are also keeping tabs on global plate prices, another factor that is impacting the buying interest. Chinese heavy plates (SS400) export offers have further declined by about $35/t w-o-w to $645-655/t FOB basis this week, as against the previous week’s $680-690/t FOB levels.
3. Demand and supply
Major steel manufacturers are trying to adjust their production to slowly improving domestic demand and overseas trade which has been heavily impacted by the 15% export duty. The duty is applicable on clad or plated non-alloyed steel products.
In the domestic market, demand has largely remained need-based for the past couple of months. A slight improvement was seen in the previous couple of weeks, as buyers started coming out with inquiries. But it was short-lived as buyers slowed down their purchases and now await price announcement from major mills. “Buying interest weakened a little this week, while the few still interested continue to bargain. However, amid limited availability of plates in the distribution channel, sellers have managed to hold prices from dropping since the beginning of July,” sources informed SteelMint.
Near-term outlook
Trade level prices of plates are likely to remain under pressure in the upcoming few weeks, despite the temporary stability seen since the beginning of the month. The buying interest has weakened a bit this week, and the market activities are likely to remain dull in the upcoming week as well. The major reason being buyers moving to the sidelines to await August price announcements from mills. Moreover, participants are anticipating a price cut of INR 2,000/t by mills in the initial few days of August.
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