Weekly: Indian steel market snapshot

The Indian steel market has observed increase in prices during week 19. Spot steel demand in the domestic segment remained moderate due to lockdown restrictions. Supply diversion of oxygen for medical use continued to lower steel production at mills, largely those of secondary players.

As per SteelMint’s assessment, domestic sponge iron market has noticed a hike in prices by INR 100-700/t. Similarly billet prices have sharply increased by INR 400-1,900/t across locations with a major increase of INR 1,000-1,900/t seen in Northern & Western India.

Also, rebar prices have increased up to INR 1,500/t in major markets w-o-w basis, however trades remained limited.

Meanwhile, In finished flat steel, steelmakers have lifted HRC and CRC offers in the domestic market due to higher export realizations.

Iron Ore and Pellets

• SAIL has managed to sell only 40,000 t of iron ore fines at auctions in Apr’21, SteelMint data shows. The dramatic decline in sales -compared to over 850,000 t in Mar’21 – is due to nil allocations from the company’s iron ore mines in Odisha – especially Bolani and Barsua that are under SAIL’s Raw Materials Division (RMD).
• OMC has scheduled its next iron ore e-auction for 1.38 mn t iron ore fines on 10th May’21. The miner has increased the base price by upto INR 1,880/t against the last e-auction held on 10th Mar’21.
• “PELLEX ” moved up by INR 100/t to INR 15,100/t DAP Raipur in the recent deals.
• SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index moved down by $2/t to $90/t FOB east coast India.
• Indian pellet export prices have recorded a further increase after hitting a record high last week. SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has increased by $2/t w-o-w to $210/t on the anticipation of improved demand after Chinese come-back from holidays.

Coal

Australian hard coking coal prices continued to edge higher on latest transactions reported for various grades of premium hard coking coals, concluded at higher prices. The coking coal spot market saw active trading across various grades in China as market participants returned after the five-day Labor Day holidays. Indian buyers are closely monitoring the pandemic situation and might be cautious towards procurement of spot cargoes for next few weeks.

• Latest offers for the Premium HCC grade are assessed at around $109.00/t FOB Australia, $238.00/t CNF China and $135.75/t CNF India.
• South African RB2 portside prices this week recorded an increase of INR 600/t w-o-w basis and have been have been assessed at INR 7,100/t ex-Gangavaram.
• South African API4 index surged this week by $7/t and reached $100/t mark amid disruption in rail line connected to RBCT port. Discounts for RB2 and RB3 were assessed at $15/t and $25/t respectively.

Ferrous Scrap

Imported scrap offers in India have rallied this week tracking the hike in Turkey prices. However, trades continued to remain slow on lower finished steel sales, production cuts on oxygen supply constraints and preference for domestic substitutes like scrap and sponge iron.

• Containerized shredded offers have increased by $20/t and stand at $485-490/t CFR Nhava Sheva basis.
• HMS offers from UK/EU origin HMS 1&2 (80:20) are now cited at $465-470/t CFR Nhava Sheva levels.

Ferro Alloys

• Indian Silicomanganese prices inched down on higher supply pressure on the producers. As the demand remains tepid on production cuts and various shutdowns in the steel plants. Currently, the prices are at INR 86,500/t Ex-Raipur and around INR 87,000/t Ex-Durgapur.
• Indian ferromanganese prices remain scattered as producers offer higher prices, while the traders have taken position and offering at lower prices. However, there are not many producers in the domestic market for Ferromanganese. Currently, the prices are at around INR 85,000/t Ex-Raipur and INR 86,500/t Ex-Durgapur.
• Indian ferrochrome prices take a deep dive of INR 2,750/t w-o-w and are currently at INR 82,250/t Ex-Jajpur. Meanwhile, along with waning Chinese demand, severe production cuts by Stainless steel mills are intensifying the pessimistic approach in the market.
• Indian ferrosilicon prices increased further after few Bhutanese plants suspend their operation amidst increased Covid-19 cases in the plant. Meanwhile, due to intermittent power cuts and load-shedding, the Meghalaya-based producers are facing severe supply issues. Currently, the market is trading at around INR 118,375/t for Bhutanese material and INR 121,625/t for Guwahati-based material.

Semi Finished

Indian semi finished steel prices increase sharply as per SteelMint assessment, the domestic billet prices have increased by INR 400-1,900/t across region with a major increase of INR 1,000-1,900/t in Mandi Gobindgarh, Mumbai & Ahmedabad. Similarly, sponge iron prices also inclined by INR 100-700/t.

• SAIL is going to conduct two pig iron (basic grade) auctions for around 2,000 t (by rail) and 500 t (by rail mode) on 12 May ’21 from its IISCO Steel Plant.
• An Indian state-owned reportedly sold 20,000 t BF rote billets (90*90 mm, C20MMn Gr.A) through a tender floated for June ’21 shipments at $635-640/t, FoB India.
• SAIL has scheduled an auction on 10 May ’21 for 4,900 t steel grade pig iron (in 49 units) from its Rourkela Steel Plant, Odisha.
• Tata Metaliks Ltd (TML) has lowered its basic grade pig iron price by INR 600/t for May. The current offer for basic grade (Si 1-1.5%) pig iron stands at INR 39,500/t ($534) ex-plant, Kharagpur, Eastern India.
• Vedanta Limited has increased its foundry grade pig iron offer on 4 May ’21 by around INR 2,300/t m-o-m to INR 46,500/t DAP Gujarat.
• Indian sponge iron export offers remain firm this week at around $425-430/t CPT Benapole, equivalent to $440-445/t CFR Chittagong, Bangladesh. Around 5,000 t deals reported on the mentioned prices.
• Steel grade pig iron prices fluctuated by INR 100-200/t (w-o-w) across regions. Domestic demand remains modest on account of drop in furnaces production.
• Induction grade billet export offers surge this week by $15/t to $590-595/t exw Durgapur (equivalent to $615-620/t CPT Nepal). A few deals reported as rolling mills production drop by 30-40% in Nepal on account of lockdown restrictions.

Finished Long

India’s finish long steel via induction route in this week has witnessed a limited demand in the spot trade market. However higher raw material cost supported the manufacturers to keep their prices high and except in few markets, in most of the major supplying regions, rebar prices have increased up to INR 1,500/t w-o-w basis.

• Indian large integrated steel mills (both state-owned and private) have announced their finished long steel prices for May’21 deliveries, which increased by up to INR 3,000/t. The current offer for rebar (12-32 mm) stands at INR 55,000-56,000/t ex-Mumbai, excluding GST, depending on different brands. Robust demand for Indian BF grade billet from overseas market lowered production and healthy rebar allocations in the project segment have resulted in a sharp hike in offers.
• Trade reference induction grade rebar steel prices of 10-25 mm size assessed at INR 45,800-46,100/t exw Raipur, INR 49,600-50,000/t exw Jalna.
• Trade discount given by Raipur based heavy structural steel manufacturers stands at INR 1,000-1,300/t and trade reference price of 200 mm angle is at INR 48,700-49,100/t exw Raipur.
• Trade discounts in Raipur wire rod stands at INR 1,400-1,600/t and trade reference prices stood at INR 45,600-45,800/t exw Raipur, INR 47,800-48,000/t exw Durgapur, size 5.5 mm.

Finished Flat

Higher export realizations motivated Indian steelmakers to lift HRC and CRC prices in the domestic market. Thus the gap between HRC and CRC spreads to a record all-time high. It was around INR 15,000/t at the beginning of May’21 after the mill announced a steep hike in prices. However, from Jan.’21 the difference between the two was around INR 11,000/t. The gap is abnormally wide since the normal gap was around INR 4,500-5,000/t. Thus the spread remains wide from Jan-Apr. SteelMint’s benchmark prices for 2.5 mm thickness HRC stands at INR 65,000-66,000/t and CRC at INR 80,500-81,000/t ex-Mumbai. The prices mentioned are basic and GST extra @18% is applicable.

Few factors behind the increased gap between HRC and CRC

• Indian steel mills lifted HRC and CRC prices thrice in last month for April deliveries. This month major steel mills announced a hike of around INR 4000-4500 in HRC and around INR 5500 in CRC.
• Recently two major private steelmakers booked around 30,000 t CRC to Europe at around $1370-1380/t CFR basis for June shipments. During the last week of Apr’21 Indian steel mills have collectively booked around 50,000 t CRC for exports to Europe at $1330- 1350/t CFR for May shipments.
• Indian steel mills have actively booked HRC and CRC for exports on a sharp surge in prices. This, in turn, resulted in tighter supplies among mills for the downstream industry which includes CRC and galvanized products of material in domestic markets.

Near term outlook- Higher HRC and CRC prices in the local market shall be absorbed or not remain uncertain owing to announced lockdown in few states.However, domestic steel mills are cushioning themselves by continuing to explore export options at higher prices.

Reference prices as on 8th May’21 (Week 19)

Prices are exw & exclusive of GST

Indian export reference prices as on 8th May’21

Prices in $/t
Source: SteelMint Research