Weekly round-up: Indian semis market shows decline

The Indian semi-finished steel market fell during week 34 (16-21 Aug’21).

Domestic billet prices dropped by INR 200-1,000/tonne (t) while sponge iron offers moved down by INR 300-1,000/t w-o-w due to falling raw material prices as well as improved supply of semis products, leading to price corrections.

Sources are expecting semis’ prices to remain under pressure on hopes of a further fall in raw material offers along with improved supply of sponge iron in the spot market.

In addition, the finished long steels market via the induction furnace route observed a price correction by up to INR 600/t w-o-w across the country.

Also, Indian hot-rolled coil (HRC) prices witnessed a further decline by INR 500-1,000/t over persistent sluggishness in demand.

Iron ore and pellets

• State-owned miner Odisha Mining Corporation (OMC) has scheduled an iron ore fines auction on 23 Aug’21 for a total of 866,000 t of iron ore fines. The base price for higher grade fines has come down by up to INR 700/t while that of low grade has come down by INR 1,350/t against OMC’s Jul’21 auction.
• The Directorate of Mines and Geology (DMG) of Goa plans to conduct the 26th e-auction for 2.037 millon tonnes (mn t) of iron ore on 27 Aug’21. The material to be put to auction consists of fines, lumps, and run-of-mine (ROM) with the highest-grade reaching Fe 58.01%. The auction is being held after a gap of almost five months.
• The Impact Assessment Division of the Ministry of Environment, Forest and Climate Change (MoEF&CC), on 18 Aug’21, granted the environmental clearance (EC) to state-run KIOCL’s Devadari iron ore mine which has an iron ore ROM capacity of 2 mn t/year and manganese ore capacity of 500 t/year.
• State-run iron ore miner National Mineral Development Corporation (NMDC) will conduct an auction for 147,000 t of iron ore on 26 Aug’21 from its Bacheli and Kirandul mines in Chhattisgarh.
• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell sharply by INR 1,100/t to INR 13,300/t DAP Raipur on 20 Aug’21. The index fell to a five-month low, with similar price levels last seen in end-Mar’21.
• SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) declined $8/t w-o-w and currently stands at $148/t.
• SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $11/t w-o-w to $46/t FoB east coast India.

Coal

The Australian premium low-volatile (PLV) hard coking coal (HCC) price continued to increase this week on the back of a number of deals concluded in the ex-China markets amidst persistent supply tightness.

Besides, exportable cargoes of seaborne coking coal are still limited, without active offers for PLV HCC, according to market sources.

Meanwhile, domestic supply tightness showed no signs of improvement in China and market participants refrained from seaborne Australian coking coal purchases as they awaited the outcome of a buy tender recently issued by a major steelmaker.

US traders of coking coal are focusing on supplying to China in anticipation of higher realisations.

• Latest prices for the premium HCC grade are assessed at around $229.00/tonne (t) FoB Australia, $378.00/t CNF China and $255.00/t CNF India.
• South African RB2 portside prices remained largely unchanged this week, averaging INR 9,300/t ex-Gangavaram.
• South African RB1 prices rose slightly by $1.2/t w-o-w to $138/t. Discounts for RB2 and RB3 were assessed at $19/t and $27/t respectively.

Ferrous scrap

Indian mills kept away from the imported scrap market as offers rose. The disparity in bids and offers kept market activities slow in India. In addition, correction in domestic billet prices kept buyers away from making fresh bookings of imported scrap.

• Fresh offers for shredded of UK/EU-origin are now at $540-545/tonne (t) CFR Nhava Sheva, up by $5-10/t w-o-w.
• Dubai-origin HMS 1 offers were heard at around $495-500/t CFR Nhava Sheva.
• HMS 1&2 (80:20) from the UAE are being offered at $480-485/t CFR Nhava Sheva, while bids were heard at $470-475/t.

Ferro alloys

The overall market saw a mixed trend with silico manganese and ferro silicon prices unchanged w-o-w, while ferro manganese prices rose marginally. However, ferro chrome prices fell.

• Silico manganese prices remained stable this week as there was a flood of inquiries but buyers refrained from booking the material as they anticipated a decline in the upcoming week. SteelMint assessed the current market price of silico manganese at INR 96,000/t exw-Raipur and INR 95,300/t exw-Durgapur.
• According to SteelMint’s assessment, ferro manganese prices have increased to INR 99,500/t exw-Durgapur and INR 100,000/t exw-Raipur for the HC70% grade, owing to better demand from the both domestic and international markets.
• Ferro chrome prices witness a slight fall this week after registering an all-time high owing to less demand from the market. Meanwhile, Vedanta’s ferro chrome auction received favourable participation with higher bid prices compared to the domestic market. SteelMint assessed the current ferro chrome prices at INR 120,000/t exw-Jajpur.
• According to SteelMint, ferro silicon prices remained stable on balanced supply-demand dynamics. However, Chinese ferro silicon prices increased which is leading to an optimistic outlook in the Indian market. Producers are offering INR 127,500/t exw-Guwahati and INR 127,000/t exw-Bhutan.

Semi-finished

The Indian semi-finished steel market fell this week after a constant support in prices in the last few weeks. Falling raw material prices as well as improved supply of semis products, led to price corrections. The prices of billets fell by INR 200-1,000/t with a major fall of INR 500-1,000/t seen in western India. Sponge iron offers moved down by INR 300-1,000/t and a sharp fall was recorded in Raipur in central India, by INR 1,000/t w-o-w.

Sources are expecting semis prices to remain under pressure on hopes of a further fall in raw material offers along with improved supply of sponge iron in the spot market. Following improved margins, the major plants are more inclined towards producing and selling sponge iron rather than pellets.

• Over 5,000 t of induction furnace (IF) route billet export deals were confirmed this week at around $575-585/t exw – eastern India (Durgapur and Odisha), equivalent to $605/t CPT Nepal. The fresh offers are hovering at $570/t exw-Durgapur.
• Steel-grade pig iron prices fluctuated by INR 200-400/t across regions on account of subdued demand and supply in the spot market.
• Indian sponge C-DRI (FeM 80%, lumps 100%) rose to $470/t CPT Benapole, equivalent to $495-500/t CFR Chittagong, Bangladesh. However no major fresh deals were reported as buyers expected a drop in offers before they take positions.

Finished longs

The induction furnace route, finished long steel market witnessed a price correction this week by up to INR 600/t w-o-w across regions, SteelMint’s assessment shows.

Moderate demand and transactions at the start of the week in rebar steel in western India and in a few other markets seems to be supportive for the sellers in keeping offers stable and marginally adjusting tradable prices owing to lessened trade activity in the middle of the week.

In most of the other major regions, despite limited demand and deals, marginal adjustments in trade prices were seen corresponding to the movement in raw material prices and buying enquiries for TMT.

• Trade reference induction grade rebar steel prices of 10-25 mm size were assessed at INR 45,300-45,700/t exw-Raipur, and at INR 48,700-49,100/t exw-Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers were at INR 1,000-1,300/t and trade reference prices of 200 mm angles stood at INR 49,700-50,100/t exw-Raipur.
• Trade discounts given by Raipur based wire rod manufacturers were at INR 1,400-1,600/t and trade reference prices stood at INR 45,800-46,000/t exw-Raipur and at INR 45,600-45,800/t exw-Durgapur, for 5.5 mm.

Finished flats

This week, domestic hot-rolled coil (HRC) prices in the trade segment witnessed a further decline by INR 500-1,000/t over persistent sluggishness in demand.

SteelMint’s benchmark price assessments of 2.5-8 mm IS 2062 HRCs stood at around INR 66,000-67,000/t (exy-Mumbai) as compared to INR 67,000-67,500/t seen a week ago. The prices mentioned above are exclusive of GST @18%.

Factors impacting market sentiments:

• End-consumers are delaying their procurement in anticipation of further decline in prices. This, in turn, has led to an increase in inventory in the distribution channel.
• Also, there were no exports in the past 15 days as demand in the overseas markets remained dull. Vietnam is under lockdown, while UAE-based importers have concluded one round of bookings. Quotas to Europe are exhausted. Thus, these markets are muted.

Factoring in the above points, the domestic steel manufacturers are providing rebates on HRCs of around INR 1,500-2,000/t to escalate buying in the domestic market.