Weekly round-up: Domestic steel market bearish amid dull trade activity

The domestic steel market remained bearish during week 36 (29 August-3 September 2022). While semi-finished steel prices plunged in the range of INR 200-1,100/tonne (t), domestic induction furnace-route finished long steel prices also showed a downward trend as offers dropped by up to INR 1,300/t w-o-w. On the similar note, trade reference prices of finished flat steel (HRCs and CRCs) decreased in the range of INR 200-1,200/t in the week under review.

Iron ore and pellets

• AM/NS India scheduled an auction on 2 September 2022 for sale of 168,000 t of iron ore from its Sagasahi mines, Odisha. The entire quantity of 72,000 t of lumps (5-18mm, Fe 61-62.5%) got booked at around INR 5,700-6,500/t. 12,000 t of fines (Fe57%) were booked at around INR 1,500/t and another 48,000 t of fines (Fe58.5%) were sold at 1,850/t. Prices include royalty, DMF and NMET.
• Government-owned NMDC recorded iron ore rake movements from Chhattisgarh at 291 in August 2022, up sharply by 71% against 170 in July, according to data maintained with SteelMint. The figure includes movements within Chhattisgarh and to other state-based units but excludes supply to AM/NS India through slurry pipeline. Notably, a rake carries 3,850 tonnes (t) of iron ore.
• The spot price of iron ore in China fell slightly on 2 September as rising port stocks impacted seaborne buying interest. Benchmark Fe 62% fines prices inched down by $0.60/t to $95/t CFR China.
• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,300/tonne (t) DAP Raipur on 2 September, down by INR 100/t compared to the last assessment on 30 August, owing to reduced offers by Raipur pellet-makers. The index fell to a two-month low, as per data maintained with SteelMint.

Coal

• Australian hard coking coal prices remained largely stable w-o-w at $274/t FOB and $291/t CNF India. The buying interest remained slow due to inflationary pressure and muted global downstream demand.
• Portside RB3 (4800 NAR) prices eased by INR 600/t w-o-w to INR 14,200/t at Vizag Port for mid-September vessel arrival amid steady demand from DRI producers in the presence of alternate origin coal.
• However, South African RB1 (6000 NAR) prices rose by $12/t w-o-w to $352/t FOB as tight gas supply kept high-CV coal demand higher in Europe.

Ferrous scrap

• India’s imported scrap market remained largely quiet throughout the week with no major deal concluded. However, prices continued to move south. Buyers were waiting for their bulk cargo arrivals with not much activity happening in the market, owing to everyone being in a festive mood.
• Subdued finished steel demand weighed upon imported scrap demand, hence scrap buyers held back further bookings.
• Europe-origin shredded scrap offers in India stood at $475-480/t CFR Nhava Sheva, moving down significantly by $10-15/t w-o-w.

Ferro alloys

• Indian silico manganese prices were down by 2% w-o-w to INR 76,700/t ex-Durgapur, INR 76,500/t ex-Vizag, and INR 77,100/t ex-Raipur on 2 September amid the downtrend in domestic steel market.
• Domestic ferro manganese prices were marginally down by 2% w-o-w to INR 78,500/t ex-Durgapur and ex-Raipur at INR 79,000/t. Ferro manganese prices were stable on continued muted demand in special steel market.
• Ferro chrome (HC60%) prices in the domestic market remained under pressure following the sharp reduction in Chinese tender prices as buyers resisted purchasing. Domestic ferro chrome prices were at around INR 94,000/t exw-Jajpur.
• Indian ferro silicon prices fell by INR 3,400/t w-o-w to INR 146,600/t exw Guwahati. Bhutan suppliers offered at INR 145,000/t exw at the initial month while Guwahati producers followed the suit.

Semi-finished steel

• Semi-finished steel market has noticed volatility in prices. Moderate demand led to fluctuations in offers floated by the mid sized mills. Domestic billet prices fluctuated INR 200-700/t while sponge iron offers declined by INR 400-1,100/t w-o-w.
• Bokaro Steel Plant (SAIL) held two auctions of steel grade pig iron on 31 August. At the first auction, no bids were received for the quantity of 4,000 t (2 rakes). In another auction, 150 t was booked at an average price of INR 44,100/t exw.
• Tata Metaliks cut basic grade pig iron prices by INR 1,800/t to INR 47,900/t and foundry grade prices by INR 1,500/t to INR 51,200/t for September orders. Prices are exw-Kharagpur and applicable for Kolkata and Howrah.
• Damodar Valley Corporation (DVC) raised power tariffs to INR 6.30/unit against INR 4.90/unit earlier, effective from August month electricity bills.
• Rourkela Steel Plant held an auction for 2,000 t (20 lots) of steel grade pig iron on 27 August. Bids were received for only 1,400 t (14 lots) at INR 45,607/t exw.
• Lloyds Metals and Energy Ltd received an environmental clearance for its proposal to install a sponge iron plant (190 tpd/75,000 tpa), captive power plant (4MW WHRB) and 90,000 tpa iron ore beneficiation plant at Konsari, Gadhchiroli district in Maharashtra.
• About 22,500 t of sponge iron (including pellet based DRI and lumps based DRI) export deals were confirmed to Nepal this week. Current offers stand at around $480/t CPT Nepal for FeM 80% material (70% lump and 30% fines).
• Indian BF-route billet export offers remained stable at around $630-635/t CPT Nepal. However, no fresh deal was reported this week due to healthy bookings done in the previous week.
• Spot prices of steel grade pig iron fell by INR 700-1,300/t, w-o-w, with the highest drop of INR 1,200-1,300/t seen in the east market, followed by INR 700-800/t in central India. Declining steel prices weighed on pig iron prices.

Finished longs

• Induction furnace-route finished long steel market observed limited trade and transactions this week. Due to the uncertain market trend in the raw material (sponge iron and billets), demand for rebar and wire rods were slow and dull sales were seen as buyers turned cautious on bulk procurement. Also, due to seasonal factors and the decline in prices of BF-route rebar, participants expect that IF-route materiaal prices to remain under pressure. Meanwhile, manufacturers lowered their offers on lower demand or gave trade discounts as per raw material price movement.
• On a weekly basis, rebar steel prices fell by INR 200-1,300/t w-o-w in most of the locations except a few markets where prices remained stable. Trade reference prices of Fe 500 grade rebar manufactured via the IF route for 10-25 mm size were assessed at INR 50,700-51,100/t exw Raipur and INR 54,300-54,700/t exw Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers were at INR 1,500-2,000/t, depending on mills. Trade reference prices of 200 mm angles stood at INR 56,000-56,500/t exw-Raipur.
• Trade discounts given by Raipur-based wire rod suppliers were at INR 700-1,000/t and trade reference prices stood at INR 51,000-51,500/t exw-Raipur and INR 51,500-51,700/t exw-Durgapur, size 5.5 mm.
• Demand for blast furnace-route rebar remained slow in the retail market as market participants were in a holiday mood amid Ganesh Chaturthi and moved to the side lines on expectation of a further decline in prices in September.
• SteelMint’s weekly price assessment of rebar (12-32mm, BF-route, IS 1786, Fe500D) stood at around INR 56,000-56,500/t ($702-709/t), on exy-Mumbai basis, exclusive of GST at 18%.
• Two major private Indian steel producers announced list prices of rebar (12-32mm, IS1786) for early September 2022 sales at INR 56,500/t ($709/t) landed Mumbai, and INR 57,500-58,000/t ($721-728/t) landed Delhi basis. Prices are exclusive of 18% GST.

Finished flat

• The holiday mood amid festivities along with market participants waiting for September price announcement by mills kept the trade activities low. Meanwhile, active bargaining amidst low demand weighed on the trade level prices of flat steel products.
• Yesterday, major private steel producers announced prices for early-September sales, lower compared to prices in early-August. List prices, after revision, stood in the range of INR 56,500-57,000/t for HRC (IS2062, 2.5-8mm) and INR 63,500-65,000/t for CRC (IS513, GR O, 0.9mm). Prices mentioned are on an exy-Mumbai basis and excludes GST @ 18%.
• On the other hand, limited buying interest for Indian HRCs with boron addition kept export offers range bound for the past four weeks. SteelMint’s India HRC (SAE1006) export index continued hovering at $583/t FOB east coast. Fresh export offers to Vietnam and UAE are expected to be floated in the following week. Also, activities in the European market are likely to pick up pace with more participants coming back from the holidays.
• The first half of September is likely to see some improvement in the market activities ahead of the festive holidays in the later half. Also, the monsoon season is coming to an end which may boost demand a little. Participants opine that prices are likely to move in a narrow band in the upcoming weeks in anticipation of easing supplies in the trade market with mills resuming operations post maintenance shutdowns.