Weekly round-up: India’s steel market remains subdued

India’s induction furnace route, finished long steels market saw limited buying enquiries while domestic hot-rolled coil prices continued to remain on the downside. Imported scrap prices into India remained range-bound.

Iron Ore

• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, was recorded at INR 12,150/t DAP Raipur on 27 Aug’21.
• Odisha’s Essel Mining has lowered offers for iron ore by up to INR 1,600/t. Prices of lump ore have been reduced by INR 1,000/t and that of fines by INR 700-1,600/t, sources informed SteelMint.
• The Directorate of Mines and Geology (DMG) of Goa has postponed the iron ore e-auction to be held on 27 Aug’21 to 31 Aug’21. Also, the quantity put to auction has been revised to 1.574 million tonnes (mn t) as against 2.037 mn t announced previously.
• SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $1/t w-o-w to $44/t FoB east coast India.
• SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) declined $8/t w-o-w and currently stands at $140/t. The index has fallen to a level which is the lowest in nine months, as per SteelMint data. The weakness in seaborne iron ore pellet prices continued on subdued buying interest from China.

Coal

Australian coking coal prices have steadily increased throughout the week, backed by strong buying interest in ex-China markets and limited spot availability, alongside fresh bookings concluded at higher levels.

Australian premium grades of coking coals are still competitively priced compared to US and Canadian materials, despite prices having been boosted by strong buying interest from Chinese buyers.

In the Chinese market, supply tightness of premium coking coal – caused by insufficient domestic supply and limited overseas supply, following import restrictions on Australian coals and Covid-related disruptions affecting Mongolian supplies – gave support to rising prices.

• Latest prices for the premium HCC grade are assessed at around $248.00/tonne (t) FoB Australia, $421.00/t CNF China and $275.75/t CNF India.
• South African RB2 portside prices remained largely stable this week, averaging INR 9,200/t ex-Gangavaram.
• South African RB1 prices rose by $4/t w-o-w to $142/t. Discounts for RB2 and RB3 were assessed at $19/t and $27/t respectively.

Ferrous scrap

Imported scrap prices into India remained range-bound as the market was slow this week. Limited offers were floated by suppliers, owing to increased trade and reasonable prices in neighbouring countries like Pakistan and Bangladesh, SteelMint understands.

Recently, a deal was concluded for 1,000 t of HMS 1&2 (80:20) of West Africa origin at $453/t basis by a western-India based mill. Fresh offers for West Africa were heard at around $450-460/t CFR levels.

• Offers for UK/EU-origin shredded are now at $525-530/tonne (t) CFR Nhava Sheva, down by $5-10/t against last week.

Ferro alloys

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

• Silico manganese prices remained under pressure due to subdued demand. SteelMint’s assessed current market prices are at INR 95,000/t exw-Raipur and INR 95,500/t exw-Durgapur
• According to SteelMint, ferro manganese prices are hovering at around INR 99,500-100,000/t exw for both Durgapur and Raipur. Robust demand has kept the prices unchanged.
• Ferro chrome prices reduced by INR 3,500/t to 116,500/t exw-Jajpur owing to tepid demand from the market. Less demand from China has also led to a decline in the prices according to SteelMint sources.
• Ferro silicon prices remained stable on healthy supply-demand dynamics. The current market price of ferro silicon is at INR 127,250/t exw-Guwahati.

Semi-finished

Indian semi-finished steel prices decreased sharply as per SteelMint’s assessment. Domestic billet prices fell by INR 800-1,450/t across regions with a major fall of INR 1,300-1,450/t seen in Durgapur, Rourkela, Raipur and Ramgarh. Similarly, low demand and falling billet prices weighed on sponge iron offers, as prices declined by INR 1,100-2,000/t.

• Vizag Steel floated a spot sale export tender for 60,000 t of steel blooms (150x150mm, 3SP/4SP grade). The tender has been floated against 100% advance payment terms with the due date being 2 Sept’21.
• SAIL conducted an auction from Bhilai Steel Plant (BSP) for defective steel products on 25 Aug’21 and bid prices for steel blooms increased by INR 1,000/t to INR 39,950/t against the previous auction conducted on 17 Aug’21.
• About 3,000 t of induction furnace (IF) route billet export deals were confirmed this week at around $560-565/t exw-eastern India (Durgapur and Odisha), equivalent to $590/t CPT Nepal. The fresh offers stood at $555-560/t exw-Durgapur.
• Steel-grade pig iron prices dropped by INR 300-1,000/t across regions due to weak demand on rigorous drop in billet prices. In addition, fall in export realisations has forced producers to improve supply in the domestic market, which ultimately put pressure on prices.
• Indian sponge C-DRI (FeM 80%, lumps 100%) export offers fell by $25/t to $450/t CPT Benapole, equivalent to $475-480/t CFR Chittagong, Bangladesh. However, demand remains poor as buyers expected further price corrections.

Finished longs

India’s induction furnace route, finished long steels market saw very limited buying enquiries and trade activities in the spot market this week across regions. Following this, TMT manufacturers in most major supplying centres reduced prices by INR 300-1,500/t w-o-w. As per market participants, owing to weak market sentiments in raw material prices, re-bar traders are very cautious and instead of buying bulk volumes procured limited quantities, only as per requirements. This factor pressurised rebar sellers to decline trade prices depending upon the movement of raw material cost and inventories at their mills, sources told SteelMint.

• Trade reference induction grade rebar steel prices of 10-25 mm size were assessed at INR 44,200-44,500/t exw-Raipur, and at INR 48,200-48,600/t exw-Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers were at INR 1,100-1,300/t and trade reference prices of 200 mm angles stood at INR 48,600-49,000/t exw-Raipur.
• Trade discounts given by Raipur based wire rod suppliers were at INR 1,200-1,400/t and trade reference prices stood at INR 43,800-44,000/t exw-Raipur, INR 43,800-44,000/t exw-Durgapur, for 5.5 mm.

Finished flats

Domestic hot-rolled coil prices have remained on the downside since the second week of Aug’21. This week, trade-level prices fell further by INR 1,000/t over tepid demand.
SteelMint’s benchmark price assessments of 2.5-8 mm IS 2062 hot-rolled coils (HRC) stood at around INR 66,000-66,500/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%.

Several factors weighed on prices:

• Built-up of inventory across the industry’s supply chain weighed on the buying intent of channel partners. Low end-user demand and constant push from mills to liquidate their inventories led to a stockpile in the trade segment, which also led to liquidity issues within the market.
• The decline in iron ore prices likely made end-users expect a decline in prices in the coming weeks. This has further led to a delay in procurement at their end.
  The previous week’s auction held by OMC didn’t fetch a good response and hence participants side-lined themselves, and are awaiting the next auction to gauge the price trend.
• Finished flat steel market participants are also showing increased interest in the global price movements. The continual decline in global HRC export offers also fuelled concerns amongst both trade partners and end-buyers regarding price trends in the domestic market.

SteelMint’s India HRC (SAE1006) export index stood at $902/tonne (t) FoB east-coast basis as against the previous week’s $911/t FoB India. Export offers for China’s HRC (SS400) dropped to $970-1,000/t FoB basis, contrasted against the previous week’s $1,000-1,020/t FoB.