SteelMint’s India Steel Composite Index declined by another 1.9% to 183.2 this week, marking the fifth consecutive week of decline. The major primary long steel producers reduced their prices for both induction furnace (IF) and blast furnace (BF) routes on mounting inventories and the downtrend in prices in the trade segment. Meanwhile, buying interest continued to remain weak for flat steel products, keeping the Steel Composite Index down.
The index is backed by robust calculation methods and is derived from the long steel and flat steel composite indices. It serves as a benchmark for end-users, EPC contractors, and manufacturers in the iron and steel industry for settling contracts or understand the market cost of physical supply of commodities such as rebar, wire rods, structurals, HRCs, CRCs, plates and 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 Jan’20 (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.
The flat steel index edged down to 189.4 (-1.9%) on the week, reflecting further softening of trade reference prices across the product portfolio. Trading activities continued to remain weak in both the domestic and overseas markets weighing on prices this week.
Trade market prices have been declining for the past five weeks, widening the gap with the mills’ list prices of HRC at INR 76,000-76,500/t ($981-987/t) exy-Mumbai, excluding GST at 18%. Moreover, most of the industrial consumers continue to resort to needs-based procurement for a long time amid elevated prices and are holding purchases now in anticipation of a further decline in prices.
On the global trade front, HRC export offers are also declining. SteelMint’s India HRC (SAE1006) export index dropped by another $50/t this week to $860/t FOB east coast, weighed down by the $60/t drop in offers to the Middle East assessed at $890-920/t CFR. Moreover, Indian mills resumed offering HRCs to Vietnam this week after a long gap of two months with indications at around $850/t CFR.
Buying interest remains low in Europe amidst elevated power costs and buyers are facing issues around opening of LCs, and increased competition and lower bids are being witnessed from the Middle East.
The long steel index also dropped by 1.9% to 177.4 due to a slump in trade market activites and mounting inventories with both induction furnace (IF) and blast furnace (BF) route long steel producers.
Major long steel producers had to reduce their offer prices amidst needs-based procurement by buyers and piling up of inventories at mills and in the traders’ market over the past three weeks. Sales volumes too shrunk as major long steel consuming industries retreated to the sidelines delaying purchases, as prices of semi-finished steel products turned volatile.
“The major drivers of demand for both long and flat steel products are infrastructure and other construction industries which provide businesses to MSMEs, OEMs and the unregulated fabrication industry. Thus, a slowdown in the former will have implications on demand from the latter, further raising concerns over trade volumes,” shared a major distributor source from western India. The approaching monsoons are expected to further impact the activities of these industries, which is adding to the concerns of both distributors and traders.
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