SteelMint: India Steel Composite Index falls by 2%, w-o-w

SteelMint India Steel Composite Index edged down 2%. While rebar fell by 2% on the week, the flat steel index also dropped by 2% with the primary steel producers announcing their Dec’21 price revisions.

SteelMint is pleased to announce the launch of the India Steel Composite Index. Backed by robust calculation methodologies, the index is derived from the Long Steel and Flat Steel Composite Indexes. The index will serve as a benchmark for end-users, EPC contractors, and manufacturers in the iron and steel industry to settle contracts or understand the market cost of physical supply of commodities such as rebar, wire rod, structurals, HRC, CRC, plates as well as galvanised plates.

• The composite index is assessed on a weekly basis: every Friday at 18:30 IST, as per the weighted average prices based on manufacturing capacity and production.
• SteelMint considers the composite index with the base year being 3 January 2020 (Financial Year 2019-2020) and the base value as 100.
• The composite index doesn’t give the absolute price.
• The Indian steel industry is broadly classified into the BF-BOF and the electric/induction furnace routes. Keeping this broad classification in view, SteelMint proposes to release the composite index by considering both production routes by manufacturing capacity and the production weighted method to compute the index for India. For details click to view the methodology document.

India Steel Composite Index falls by 2%, w-o-w
The index was assessed at 159 on 3 Dec’21 — a decline of 2%, week-on-week and 5% on the month.

Major mills reduce list prices for Dec’21 deliveries: One key factor behind the index falling is the reduction in prices of finished steel announced by leading private producer JSW Steel Ltd. The company has cut its Dec’21 list prices for HRC and CRC by up to INR 2,500/t ($33/t) after which the effective price of HRC (IS2062, 2.5-8mm) stands at around 67,500-68,000/t ($900-906/t), while CRC (IS 513 Gr O, 0.9mm) is at INR 74,500-75,000/t ($991-998/t). These prices are on an exy-Mumbai basis and excludes GST at 18%.

Meanwhile, the list prices for long products- Rebar (12-32 mm, blast-furnace route) was reduced by INR INR 3,000/t ($40) to INR 57,000-57,500/t ($760-766), and Wire rod (5.5-6mm) by NR 2,000/t ($27) to INR 57,500-58,000 ($766-773) for Dec’21. Prices are on FOR-Mumbai basis, exclusive of GST @ 18%.

Other major manufacturers are likely to follow suit.

Easing raw material prices: Raw material prices have softened throughout Nov, thereby relieving cost pressure. Australian premium low-volatile hard coking coal prices slipped by $90/t over the last fortnight from $426/t to $336/t. It may be recalled that coking coal prices had escalated to around INR 23,500/t levels over Jan-Oct’21 which translated into a cost impact of INR 18,000-19,000/t for mills. South African RB2 coal portside prices, too, fell by 37% m-o-m in Nov.

PSU miner NMDC’s iron ore lump prices have dropped to eight-month lows while global spot prices of benchmark Fe 62% iron ore fines declined to $98/t CFR China levels from stratospheric highs of $230/t CFR in May’21.

Fall in global HRC export offers: There has been a continual decline in global HRC prices in Nov. For instance, Chinese HRC (SS400) export offers have slumped by $100/t to $775/t FOB by end-Nov compared to $875/t FOB in the beginning of the year. Furthermore, prices have been declining for seven consecutive weeks since mid-Oct when prices were at $985/t. Also, SteelMint’s India HRC (SAE 1006) export index dropped by $15/t, w-o-w, to $800/t FOB east coast (ex-mill realisation stands at INR 58,000-58,500/t). Therefore, the focus is to liquidate inventories in the domestic market.

From a global perspective, rebar futures contracts for May’22 delivery on the Shanghai Futures Exchange (SHFE) fell by 1% m-o-m, to RMB 4,296/t (approximately $674/t) as on 3 Dec’21. Meanwhile, the HRC contract for Jan’22 delivery on SHFE stands at RMB 4,696 ($736/t), a decline of 0.38% on the month.