Indian Steel Market Overview, September 2017

Indian Steel Market remained downward due to seasonal weak demand amid festive mood during September.

In this period, domestic prices of Semis & Finished steel (long & Flat Steel) decline around INR 500-800/MT (USD 7-13). However, a slight price rise being reported in key raw materials like – Iron ore, pellet & coal due to strong global demand.

The price changes in this monthly review is compared on monthly average basis – Sep’17 Vs Aug’17.

Iron Ore: NMDC – the state owned largest iron ore miner have increased their offers by 9% for September deliveries. The merchant miners in India’s largest iron ore producing state – Odisha, have increased the offers by INR 150-300/MT for fines and INR 300-600/MT for lumps for the month.

– NMDC recorded a drop of 7% in its monthly iron ore production in Aug’17. The miner produced 2.25 MnT iron ore in Aug against 2.41 MnT in Jul’17.

– NMDC had scheduled auction for 168,000 MT iron ore from its Chhattisgarh mines on 14 Sept’17. Acccording to sources, the auction recieved good response as the bid price gone high (DR-CLO went up by around INR 540/MT).

– In the last week of Sept’17 production and dispatch of iron ore halted for over a week from the Odisha based Serajuddin & Company Ltd. The mines is the second largest merchant miner in the state with an annual production of about 9 to 10 million tonnes.

In Aug’17, India’s crude steel production reported at 8.47 MnT increase by 1.68 % M-o-M against in Jul’17 at 8.33 MnT and increase by 0.8 % compared with 8.0 MnT in Aug’16.

Pellets: Indian pellet market was supported by rising exports and moderate demand by domestic sponge producers, as offers increased by INR 500/MT (USD 8) on monthly average basis.

– India exported 5.79 MnT pellets in CY16. So far in CY17 (till Aug’17) Indian pellet exports have already reported at 5.93 MnT, according to data maintained by SteelMint Stats.

Coking Coal: The coal offers have remained strong in the month and are reported a rise of USD 12-14/MT on monthly average basis. The current offers for Premium HCC, Australian coal are around USD 212/MT, CNF India.

Sponge iron & Billets: Amid weak demand and lower export orders, domestic sponge & billet offers fell in the range of INR 400-800/MT (USD 6-12). With decline in prices, the manufacturers margins (conversion spread) also moved downwards.

– In the end of Sept’17, Vizag Steel had cancelled export tender of 15,000 MT billet due to low bids received by the company at around USD 475/MT FoB. The last export by the company was concluded at USD 515/MT FoB in the beginning of Sept’17.

– In the same time, Steel Authority of India (SAIL) had also floated a tender for export of around 18,000 MT billets from its IISCO Steel Plant. According to market sources, the company received bids around USD 475-480/MT and have cancelled the tender as they were expecting higher bids. Prior to this, in the mid of Sept, couple of export deals have taken place at around USD 480/MT FoB.

Scrap: In the month no major bookings of imported scrap seen by Indian buyers as smelters largely prefers domestic scrap. The domestic scrap offers were fluctuated in the range of INR 400-600/MT (USD 6-9) M-o-M.

Imported ferrous scrap offers were almost firm during the first half of Sept’17 although it fell sharply later in the month. In Sept’17 monthly average offers for HMS 1&2 reported at USD 308/MT against in Aug’17 at USD 319/MT from Middle East origin, CFR Nhava Sheva.

Pig Iron: Indian Pig iron offers increased for domestic & exports as well due to surge in global coking coal offers. The domestic offers increased by INR 500-1,200/MT (USD 7-19) and export offers surge by USD 10/MT to USD 370/MT FoB India.

In the month Pig iron export prices in India have crossed the levels of 3 years high in the tender floated by MMTC of about 30,000 MT.

Neelachal Ispat (NINL), India’s largest and state owned steel grade pig iron manufacturer had increased its offers by INR 1,000/MT (USD 15) in the initial days of the month but buying interest was low, according to market participants. Further, the company has stopped offering steel grade pig iron in domestic market as its blast furnace is due for capital maintenance in the month of October 2017.

Long Steel: In the beginning of Sept, the large producers have increased rebar prices by INR 1,000-1,200/MT (USD 15-19). However, in the 2nd half of the month the producers have reduced prices around INR 500/MT on poor demand and slump in global steel prices. Heavy rainfall in the country have made poor off take of rebars as construction works too came to a halt.

Flat Steel: Indian Flat steel prices in trade market also registered a decline of INR 500/MT in Sep’17 Vs Aug’17 average prices. The prices fall due to gloomy market sentiments, favorable imports & weak global trade activities.

Similarly, the export offers for HRC on monthly average basis reduced by USD 10/MT and stood at USD 590/MT FoB India.

According to provisional customs data, India imported 0.76 MnT of flat steel in Aug’17 up by 9% M-o-M compared to 0.7 MnT in Jul’17. However on yearly basis, Indian flat steel imports have increased more than two fold in Aug’17 in comparison to 0.34 MnT in Aug’16. Further, in the tenure of Jan-Aug’17 nation’s finish flat imports have reduced by 10% to 4.08 MnT compared to 4.52 MnT in similar time frame of previous year.

India’s Finished steel production in Aug’17 surge by 7.33 % to 8.05 MnT against 7.5 MnT during Jul’17. Further on Y-o-Y it increase by 1.13 % compared with 7.96 MnT in Aug’16.

Monthly Average Prices – Sept’17 Vs Aug’17

Prices are Ex-works, Exclusive of GST at 18%

Indian Export Reference Prices as on Sep’17

Prices in USD/MT
Source: SteelMint Research