Weekly round-up: Semis market remains bearish on subdued finished steel demand

The domestic steel market moved south during week 46 ( 7-12 November, 2022). Semi-finished steel prices dropped in the range of INR 200-1,500/tonne (t).

Domestic induction furnace finished long steel offers witnessed a downward trend, with offers declining by INR 1,500/t w-o-w. The trade reference price for finished flats edged down by INR 100-1400/t.

Iron ore and pellets

• SteelMint’s bi-weekly domestic pellets (Fe 63%) index, PELLEX, stood at INR 7,800/tonne (t) DAP Raipur, stable compared to the last assessment on 8 November, 2022. Around 5,000 t of deals were reported in this publishing window.
• Vedanta conducted 120,000 t of iron ore fines (Fe57%) for auction from its A. Narrain mines in Karnataka’s Chitradurga district on 11 November. The entire material was sold at the base price of INR 1,277/t (excluding royalty, DMF and NMET), sources informed.
• Odisha Mining Corporation (OMC) had scheduled an auction for unsold and seized iron ore on 10 November. As per latest information, the entire quantity of 56,618 t of crushed fines (Fe 58.63%) and 24,905 t of screened lumps (Fe 62.11-62.24%) were booked at INR 2,591/t and INR 4,862/t, respectively (including royalty, DMF and NMET).
• The Goa government has recently released the amendments in the auction timelines for all the iron ore mines. The auction of the four mining blocks drew active response from mining and steel companies, prompting the Directorate of Mines and Geology (DMG), Goa Govt., to revise the timeline for the auction process so that it could respond to all the queries raised by the prospective bidders. The last date for sale of the tender document has now been extended from 15 November to 22 November.

Coal

• Portside RB3 (4800 NAR) prices fell by INR 600/t w-o-w to INR 13900/t at Vizag Port as imported coal prices eased.
• South African RB1 (6000 NAR) prices fell further to $186/t, FOB down by $31/t amid limited European inquires.
• Australian hard coking coal prices fall by $16/t w-o-w to $300/t FOB and $318/t CNF India. The prices fell due to dull demand and ample supply within the market.

Ferrous Scrap

• Imported scrap prices moved south for yet another week amid weakening of finished steel demand and sales in the market. Buyers have booked few slots of small quantity as previously booked cargoes are widely available in the market. Market participants except further drop in prices due to falling Turkish scrap prices in recent deals.
• Meanwhile, the subdued market sentiments likely to kept imported scrap prices lower in the near term.
• SteelMint’s assessment of Europe-origin shredded scrap offers into India were at $420/t CFR Nhava Sheva, down $10-15/t w-o-w.

Ferro Alloys

• According to SteelMint’s assessment on 12 November, Indian silico manganese prices were down by 5% w-o-w to INR 73,900/t ex-Durgapur, down by 3% to INR 75,200/t ex-Vizag, and 3% down week over week to INR 75,900/t ex-Raipur. The decline in demand, both domestically and internationally, which causes silicon manganese to price on down trend.
• As on 12 November, Indian ferro manganese prices dropped around 2% w-o-w to INR 76,000/t ex-Durgapur and ex-Raipur at INR 77,000/t. Despite some slight price declines in ferromanganese, demand for stainless steel and special steels last week stalled.
• Indian ferro chrome prices remained soft w-o-w due to muted demand from both domestic and export market. According to SteelMint assessment on 10 November, Indian producer were offering at around INR 104,000-105,000/t exw but buyers were asking material below at INR 103,000/t post Vedanta’s auction result on 10 November.
• According to SteelMint’s assessment on 11 November, Bhutan producers offered at around INR 125,900/t exw while Guwahati producers’ prices were at around INR 125,000/t exw, remained stable w-o-w amidst moderate demand.

Semi finished

Semis trades slowed down this week as prices slumped by INR 200-1,500/t amid low enquiries for finished products in major markets.

• Domestic billet prices decreased by INR 200-1,500/t. Sponge manufacturers had pressure piling on them and had to reduce their offers by INR 500-1,100/t w-o-w.
• Rourkela Steel Plant (SAIL) held an auction for 2,000 t of steel grade pig iron on 5 November. The entire quantity was booked at an average price of INR 40,500/t exw.
• SAIL-Bhilai Steel Plant’s auction for 2,000 t of steel grade pig iron was booked at an average price of INR 41,200/t exw on 5 November.
• Central India’s leading steelmaker, Godawari Power and Ispat Limited (GPIL), recently announced its Q2FY’23 results. The total steel billets output for the quarter stood at 34,705 t, a q-o-q fall of 21% compared to 43,942 t in the previous quarter.
• Indian sponge iron export price assessment remained stable $430/t CPT Nepal, (FeM 80%, lumps 70%, fines 30%). Demand continued to remain weak on account of uncertain price movements and weak finished steel demand in Nepal.
• Spot steel grade pig iron prices fell by INR 700-1,500/t and the major fall of INR 1,300-1,500/t was seen in the central region. Prices remained under pressure on account of improved spot supply and decline in steel prices.
• About 1,000 t of Indian IF-route billet export deals were reported this week at around $540/t exw Durgapur, equivalent to $565-570/t CPT Nepal.

Finished Long

India’s finished long steel market from the induction furnace route observed limited buying enquiries throughout the week, which varied across regions.

A slight demand recovery was seen in the beginning of the week on account of a surge in steel billet prices in north India. The market was trying to stabilise and saw increased trade volumes in the spot market as compared to last week. Although due to lack of healthy momentum and buying enquiries, manufactures preferred either to decline the offers or offer trade discounts depending upon payment and delivery terms.

Sources believe that if demand remains moderate, prices of finished steel products will remain under pressure as stocks are sufficient with most mid-sized mills.

• On a weekly basis, rebar steel prices plunged INR 500-1,500/t across regions, as per SteelMint assessment.
• The trade reference price of Fe 500 grade rebar manufactured via the IF route for 10-25 mm size was assessed at INR 47,800-48,200/t exw Raipur, INR 52,400-52,900/t exw Jalna.
•  Trade discounts given by Raipur-based heavy structural steel manufacturers is stood at around INR 1,500-1,700/t and trade reference price of 200 mm angles stood at INR 53,600-54,000/t exw Raipur.
• Trade discounts in wire rod given by Raipur-based resellers were around INR 700-900/t and the trade reference price was at INR 47,300-47,600/t exw Raipur and INR 47,400-47,600/t exw Durgapur for size 5.5 mm.
•  BF route-Rebar prices across various markets dropped this week because of low market activity. Restrictions on construction and logistical activities in the neighbouring regions of the country capital has weighed on the demand. Furthermore, IF route rebar prices showed high volatility this week adversely impacting the market sentiments for BF route products.
• This week’s assessment for rebar (12-32 mm, BF-route, IS 1786, Fe500D) edged lower by INR 400/t to INR 55,500-56,500/t exy-Mumbai, excluding GST @ 18%.

Finished Flat

• Trade level prices of finished flat steel products continued to remain under pressure this week. Slower sales momentum in the traders’ market weighed on the offers quoted by sellers.
• HRC and CRC prices saw a steeper decline in most of the markets, however, were mostly rangebound in the key market of Mumbai. Imports turning viable amid competitive offer prices, easing of supplies by domestic producers compared with the past few months and expectation of further softening of prices have kept the buyers cautious in the domestic market.
• On the exports front, SteelMint’s India HRC (SAE1006) export index dropped steeply by $55/t w-o-w to $518/t FOB east coast India, hitting a two year low mark. Limited buying interest in the overseas markets amid declining global HRC export offers, recessionary concerns, and alloyed HRCs being offered from India have kept the overseas trades lackluster. Furthermore, China has turned aggressive in the Vietnamese and Middle East markets and is offering at lower price levels.