Spot trade remained weak during week 26 of CY’21 as prices moved down by up to INR 500-1,800/t in semis products (sponge iron and billets) and by INR 600-1,900/t in finished long steel products, including rebars.
Following a constant fall in prices, the margins (conversion spread) of secondary steel mills also dipped as raw material prices remained stable with slight variations. Hence, to balance the demand-supply chain as well as improve margins, the producers based in central and eastern regions are planning to curtail production by around 50%. Even a few standalone furnaces will likely go into temporary shutdown from Jul’21.
Iron ore and pellets
- The State-owned Steel Authority of India- (SAIL) conducted an auction on 23 Jun’21 for 100,000 tonnes (t) of iron ore tailings of Fe 59.8% content from its Barsua mine in Odisha. The auction received bids for the entire material offered at INR 7,350-7,430/t (ex-mines, including royalty, DMF, NMET and other statutory levies).
- Leading Odisha-based merchant iron ore miner Rungta Sons Pvt Ltd increased iron ore fines (Fe 62%) prices by up to INR 500/t ($7/t), sources informed SteelMint.
- Orissa Metaliks books 32,000 t of iron ore fines at the NMDC auctions. The miner procured 32,000 t of the ore fines (Fe 63.1%) at INR 5,516/t (basic, excluding taxes).
- NMDC conducted an e-auction on 24 Jun’21 for 63,000 t of iron ore fines (Fe 61%) from its Bacheli mines in Chhattisgarh. According to sources, the entire quantity received bids at INR 5,968-5,978/t (FoR Bacheli, excluding royalty, DMF and NMET) against the set base price of INR 5,558/t. In another auction held on 23 June’21 for 105,000 t of iron ore slimes (Fe 57/58%), the entire quantity received bids at INR 3,020/t (basic, excluding royalty, DMF and NMET) against the set base price of INR 2,800/t.
- SteelMint’s bi-weekly domestic pellet index, PELLEX, fell marginally by INR 50/t to INR 15,950/t, DAP Raipur.
- SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index decreased sharply by $6/t w-o-w to stand at $82/t, FoB east coast India.
- SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) recorded a decline of around $7/t w-o-w to $223/t.
Coal
Australian coking coal prices strengthened on sustained demand, supply crunch.
- Australian premium hard coking coal (HCC) prices increased relentlessly this week, on persistent high demand in the ex-Chinese Asian markets, while spot availability of premium cargoes remained tight.
- However, Indian demand for seaborne coking coal remained largely subdued, as both steel demand and metallurgical coke prices are declining due to the onset of the monsoon season.
- Meanwhile, ongoing safety checks and suspension of operations at various coal mines in China fuelled supply concerns.
- Latest prices for the premium HCC grade are assessed at around $184.00/t FoB Australia, $308.00/t CNF China and $210.80/t CNF India.
- South African RB2 portside prices remained largely unchanged this week, averaging INR 8,000/t ex-Gangavaram.
- South African RB1 prices rose further by $1.9/t w-o-w to $116.10/t this week. Discounts for RB2 and RB3 were assessed at $17/t and $25/t respectively.
Ferrous scrap
Indian mills stayed away from bookings because of disparities in bids and offers following falling steel margins on subdued domestic demand.
Market insiders kept their eyes on domestic raw material substitutes. Moreover, the finished steel market remained slow amidst the monsoon. Steel mills have already stocked up inventory.
- Fresh shredded offers were heard at $530-540/t CFR. However, no interest has been heard above $520/t from buyers. Induction furnaces are not interested in shredded, said a source.
- HMS 1&2 offers were at $470-475/t CFR from Dubai. But bids seem to have dropped to $463-465/t CFR levels.
- UK HMS 1&2 offers in containers were heard at around $495-500/t CFR Nhava Sheva.
Ferro Alloys
The overall market saw stability with domestic manganese alloys and ferrosilicon prices unchanged from last week. However, ferrochrome prices increased owing to supply constraints.
- Silico manganese prices remained stable at the beginning and tapered at the end of the week at INR 99,500/t for Durgapur and INR 99,500/t for Raipur as many steel mills reduced their operations levels, thus hindering the demand in domestic market.
- Ferro manganese prices increased and are hovering at around INR 103,500 – 104,000 /t for both Raipur and Durgapur. Demand from export markets remained bullish as the Malaysian supplies are stopped due to plant closures.
- Ferro silicon prices are stable w-o-w on higher prices at INR 140,000/t from Guwahati and INR 135,000/t from Bhutan amidst bullish buying sentiments. Demand is strong from the export market. Producers are expecting that prices may further increase due to supply shrinkage.
- Ferro chrome prices rose amidst supply crunches as more than 20% of production is out of market Current ferrochrome prices are at INR 101,500/t Exw Jajpur higher by INR4500/t w-o-w. Export and domestic demand both remained sluggish.
Semi-finished
Indian semi-finished steel prices decreased sharply as per SteelMint assessments. Domestic billet prices fell by INR 500-1,800/t across regions with a major fall of INR 1,500-1,800/t seen in Raipur in central India and Mandi Gobindgarh in north India. Similarly, low demand and falling billet prices weighed on sponge iron offers, as prices declined by INR 500-1,300/t.
With the constant fall in prices, margins of standalone mills have dropped sharply. Hence, manufacturers in major locations in central and eastern India are planning to reduce their capacity utilisation level from Jul’21, to maintain supply-demand balance as well margins (conversion spread).
- Tata Metaliks reduced its foundry grade pig iron prices by INR 1,200/t to INR 42,400/t, while the basic grade pig iron (Si 1-1.5%) prices were reduced by INR 1,400/t to INR 39,200/t. The prices are exw-Kharagpur and applicable for the Kolkata and Howrah markets.
- An Indian mill reportedly sold around 18,900 t of steel bloom (200*280mm) through an export tender at around $610/t, on FoB basis, for Aug’21 shipments.
- Indian sponge iron export offers fell this week by $20/t on account of weak demand. Fresh offers floated are at $450/t, CPT Benapole, equivalent to $475/t, CFR Chittagong, Bangladesh.
- Steel grade pig iron prices dropped by INR 1,000-1,500/t in central, east and northern India. Weak demand due to falling billet prices continue to weigh on the Indian pig iron industry as furnaces’ margins dipped.
- Induction grade (IF) billet export offers plunged by $25/t w-o-w with fresh offers at around $550/t, exw-Durgapur (equivalent to $575-580/t CPT Nepal). Demand slightly improved this week on falling prices and about 5,000 t of deals were reported during the middle of the week.
Finished longs
Finished long products made through the induction furnace route saw a downtrend in terms of prices and buying enquiries this week as well. In major rebar supplying centres prices declined by INR 600-1,900/t w-o-w, as per SteelMint’s assessments. Weak seasonal demand and falling semi-finished steel prices remain a major factor behind the fall in rebar prices. Low demand, along with the rainfall in some regions, also affected spot trading.
A consistently sluggish demand scenario is leading to 20-25 days of inventory pile-up at mills. This is pressuring the long steel manufacturers to reduce their offers as per market requirements.
- Trade reference induction grade rebar steel prices of 10-25 mm were assessed at INR 44,200-44,500/t exw-Raipur, and at INR 46,300-46,700/t exw-Jalna.
- Trade discounts given by Raipur-based heavy structural steel manufacturers stand at INR 700-900/t and the trade reference prices for 200-mm angles are at INR 47,800-48,200/t exw-Raipur.
- Trade discounts given by Raipur-based wire rod manufacturers are at around INR 1,000/t while the trade reference prices stood at INR 44,500-44,700/t exw-Raipur, and at INR 43,500-43,700/t exw-Durgapur, for the 5.5 mm category.
Finished flats
This week SteelMint’s benchmark prices for 2.5 mm hot-rolled coils (HRC) stand moderate at INR 66,000-67,000/t (exy-Mumbai) against INR 66,500-67,500/t (exy-Mumbai). The prices mentioned above does not include GST extra @18%.
The prices remain under pressure owing to below reasons:
- Decline in buying interest over anticipation of further decline in prices.
- Anticipation of correction in list prices by steelmills for July deliveries.
- Lower overseas demand in Southeast Asian countries over a surge in Covid-19 cases.
Reference prices as on 26th June’21 (Week 26)
Prices are exw & exclusive of GST
Indian export reference prices as on 26th June’21
Prices in $/t
Source: SteelMint Research
Leave a Reply