Weekly: Indian steel market snapshot

India’s secondary steel market has marked further fall in prices during this week due to mismatch in supply chain as demand continued to remain subdued, while supply remains strong.

As per the assessment, Indian semi-finished market has observed a fall in prices of around INR 300-600/t in sponge iron and INR 700-2,000/t in billet during week 5. Also, finished long steel prices dropped by INR 800-1,900/t w-o-w in rebar due to lack of buying inquiries and trade activities, with a sharp fall noticed in the southern region, Chennai by INR 2,700/t.

In line with this, domestic HRC & CRC prices in trade segment declined by around INR 1,500-3,000/t due to sluggish demand and stalled purchases in the market.

Iron Ore and Pellet

Odisha Mining Corp (OMC) has scheduled its next iron ore e-auction on 1st Feb’21. The auction is being conducted for 933,000 t iron ore lumps. The miner has increased the base price by up to INR 1,500/t against last auction’s base price held on 2nd Dec’20.

• Sarda Mines has been slapped with a demand of INR 2056 cr for producing the permitted annual limit of Thakurani B iron ore block in February and March of 2020.
• NMDC conducted iron ore e-auctions for 701,400t iron ore from its Chhattisgarh mines. Offered quantity comprised of 600,000 t of fines, 50,400 t DR CLO and rest comprised of lump and ROM. The DR-CLO lots received a good response and bids increased by around INR 1,300/t over the set base price. However, the fines lot received a weak response with just two rakes getting booked at base price.
• SteelMint’s bi-weekly domestic pellet index “PELLEX ” remains stable at INR 12,100/t DAP Raipur.
• SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index fell by around $6/t this week and is currently assessed at $94/t FoB east coast India.
• SteelMint’s weekly pellet export index (FOB east coast India) has dropped to $194/t after hitting all-time high levels of $196/t. The index has come down by $2/t w-o-w. The drop in the index is attributed to lower bids from Chinese end-users ahead of approaching holidays and falling global iron ore prices. Chinese lunar New Year holidays, and approaching Chinese spring festival have kept buying inquiries on the lower side.

Coal

• Australian coking coal prices have continued to gain sharply this week following spot transactions concluded at higher levels, and with higher firm bids seen in the ex-Chinese market.
• Two trades for 75,000 t each of PLV HCC cargoes were concluded on Wednesday 27 Jan’21, at $155/t and $154/t FOB Australia, with early-mid March laycan.
• Another spot deal for 75,000 t with early-March laycan was concluded on Tuesday 26 Jan’21 at $151/t FoB Australia.
• Rising restocking demand and buyers’ concerns over potential supply disruptions during Australia’s cyclone season are key factors behind the recent rally in prices.
• Competitively priced Australian cargoes relative to Atlantic coals of similar grades is also supporting prices thereof.
• Latest prices for the Premium HCC grade are assessed at around $160.50/t FOB Australia, $219.00/t CNF China and $174.80/t CNF India.

Ferrous Scrap

Imported scrap market in India continued to remain in limbo. Most of the mills are procuring domestic scrap & sponge iron as it is more costeffective. Due to the weak Indian domestic market, mills are not booking any cargo currently and have adopted a wait- and- watch approach for the time being, SteelMint learnt from its sources. Buyers are also cautious as the budget announcements are round the corner.

• SteelMint’s assessment for containerised shredded stands at $420/t CFR Nhava Sheva level, down by $15/t w-o-w.
• All the trades are taking place in the high seas for cargoes which were bought last month by Indian traders or suppliers, SteelMint learnt.

Ferro Alloys

• Indian silico manganese prices went down owing to dull demand in the domestic market. Meanwhile, producers are eagerly waiting for the MOIL prices which is expected to increase to maintain the price parity with the imported ores.
• Ferro manganese prices went down in Raipur and Durgapur, due to moderate demand in the domestic market. The prices are downtrending amidst lowering steel prices.
• Ferro chrome prices remained stable at INR 95,000/t in the week, due to tepid buying interest in the domestic market. Buyers are waiting for the Chinese New year, as they expect the prices to fall as Chinese return after holidays.
• Indian ferro silicon prices came down due to dull demand in the domestic market. However, increasing international prices and no imports are keeping the sentiments positive but the prices might slow down on reduced buying.

Semi Finished

This week, sponge iron offers fell by INR 300-600/t, however billet prices drop sharply by INR 700-2,000/t across regions with a major fall in billet prices reported in South India (Chennai) by INR 2,700/t & by INR 1,200-1,500/t in Eastern region.

Following a significant fall in prices, the conversion spread (margins) dipped of sponge iron & billet makers by INR 1,000-2,000/t during the last week of Jan’21 & with lessened margins, the standalone plants are planning to cut production to balance supply-demand as well margins.

• Induction grade billet export offers to Nepal drop by $25-30/t this week to $470-475/t exw Durgapur (equivalent to $495-500/t CPT Nepal). Participants claim few deals yesterday at $470-472/t exw Durgapur.
• Indian sponge iron export prices fell by $15/t to $340-345/t CPT Benapole (equivalent to $355-360/t CFR Chittagong, Bangladesh). However, about 7,000 t deals reported during the mid of week at $355/t CPT Benapole.
• Steel grade pig iron prices declined by INR 700-2,000/t on account of constant fall in billet prices. Participants assuming, prices to dip further as supply remains healthy & the major buyers are still out of the market.
• SAIL conducted a pig iron auction from its Rourkela Steel Plant for 5,400 t material on 30 Jan ’21 & bids have been lowered by INR 2,800-2,900/t to INR 30,450/t exw, compared with previous auction held on 22 Jan’21.
• An eastern India based private steel mill has booked two parcels (50,000 t) of granulated pig iron (C-5% max, Si- 1.5%, S – 0.09%) for export last week. The price indications for the deal were heard around $480/t FoB India. Indian mill reported having booked 30,000 t billets (150*150mm, 3SP/4SP) through a spot sale tender at $530-535/t, FoB. Prices have come down by around $40 against its previous tender concluded in early Jan’21 at around $575-576/t FoB.

Finished Long

India’s finish long steel market via induction route observed lack of buying inquiries and trade activities in this week as well, and in most of the major supplying regions rebar manufacturers reduced their offer by INR 800-1,900/t w-o-w basis except in Raigarh (Central region) market where the prices decreased marginally by INR 200/t owing to lowered offer comparatively to other market, while in Chennai market of Southern region to maintain the price parity of other competitive markets rebar prices sharply declined over INR 2,500/t. As per trade sources, along with lack of demand, reducing raw material cost are also a major factor behind lowered long steel prices.

• Trade reference rebar prices of 10-25 mm through midsized mills assessed at INR 38,800-39,000/t exw Raipur, INR 42,900-43,300/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers is stood at INR 800-1,200/t and trade reference price of 200 mm Angle is at INR 41,800-42,200/t exw Raipur.
• Trade discounts in Raipur wire rod are currently at INR 1,600-1,800/t and trade reference prices stood at INR 37,200-37,400/t exw Raipur, INR 38,600-39,000 exw Durgapur, size 5.5 mm.

Finished Flat

Domestic HRC & CRC price decline on sluggish trades: Regional prices of HRC and CRC reported a sharp decline by around INR 1,500-3,000/t ($20-41) due to sluggish demand and stalled purchases in the domestic market.

SteelMint’s trade reference prices are mentioned below:

• HRC (IS2062 2.5-8mm) stood at INR 55,000-56,000/t exy Mumbai, INR 53,000-54,000/t exy Delhi, and INR 57,000-58,000/t exy Chennai.
• CRC (0.9 mm GR) is around INR 67,000-68,000/t exy Mumbai, INR 62,500-67,000/t exy Delhi, and INR 67,000-71,000/t exy Chennai.

Factors behind price decline –

• Traders are reluctant to purchase material at higher prices since they have enough inventories at the moment.
• The premium between the mill price and trade prices is very low due to which trader’s profit margin is affected.
• The 2nd price hike didn’t get absorbed in the market. In the mid of Jan’20, few major steel mills announced the second hike of around INR 2000/t on supply constraints.

Outlook – Major steel mills are planning to increase domestic flat steel prices by around INR 1,000-1,500/t in the near term to maintain the momentum.

Reference Prices as on 30 Jan’21 (Week 5)
Prices are exw & exclusive of GST

Indian export reference prices as on 30 Jan’21
Prices in $/t
Source: SteelMint Research