Weekly Round up: Steel prices fall sharply after govt announces export duty

The domestic steel market fell sharply during week 22 ( 23 May-28 May’22). Semi-finished steel prices edged down in the range of INR 2,400-6,500/tonne (t).

Domestic induction furnace finished long steel offers witnessed a downtrend with offers dropping up to INR 6,500/t w-o-w. The trade reference prices for finished flats fell in the range of INR 1,500-4,600/t for HRC and CRC.

Market sentiments turned bearish after the government imposed a new duty structure on steel and raw material exports which led to the sharp reduction in prices of raw materials and semi-finished products. Demand for finished steel reduced as buyers remained cautious about procurement.

Iron ore and pellets

• SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,750/tonne (t) DAP Raipur on 27 May 2022, down by around INR 250/t compared to the last assessment on 24 May. With the decline in sponge iron and steel prices, pellet buying activity remained limited.
• India’s pellet export market has turned silent after the announcement of the steep export duty. The Indian government has recently imposed a steep 45% export duty on iron ore pellets from none previously with the objective to control inflation and soaring steel prices and to ensure higher availability for the domestic industry.
• In an indication of the sharp fall in the domestic steel raw materials market after the recent export duty revision, many buyers who had booked iron ore from different miners have slowed down lifting of material, SteelMint learnt from sources.
• The country’s leading iron ore miner NMDC cut prices up to INR 750/t on 25 May. Fines prices have fallen by INR 750/t and DR-CLO prices by INR 720/t. Prices have edged down to a four-month low.

Coal

• Australian coking coal prices fell by $60/t this week amid sluggish steel demand in Asian countries. The latest price is assessed at $465/t FOB Australia and $494/t CNF India.
• Portside RB2 (5500 NAR) prices fell by INR 2000/t w-o-w at INR 21,000/t at Gangavaram Port this week amid weak buying appetite of sponge iron manufacturers following the hike in export duty on steel. South African RB1 prices also eased by $35/t w-o-w at $295/t FOB amid weak enquiries from India.

Ferrous Scrap

• Imported scrap trade remained slow throughout the week. However, offers inched up on a d-o-d basis after witnessing a decline on global cues. Market participants opted to wait and watch due to uncertainty post export duty changes announced by the Indian government last week.
• Fresh shredded offers were at $515/t CFR NHSV level, down by $15-20/t levels w-o-w. However, buyers did not show interest at these levels. Buyers’ price ideas were at $508-510/t CFR.
• Fresh shredded offers were at $515/t CFR Nhava Sheva, down $15-20/t w-o-w.

Ferro Alloys

On the domestic market, ferro alloy prices declined over the past week due to the fall in finished steel prices.

• India’s silicon manganese (60-14) prices continued to drop due to the lack of enquiries and demand. Based on SteelMint’s assessment on 28 May, silicon manganese prices decreased by INR 3,000/t w-o-w to INR 81,700/t ex-Raipur, INR 80,800/t ex-Durgapur and INR 81,250/t ex-Vizag.
• Ferro manganese (HC70%) prices in India dipped INR 2,000-3,500/t w-o-w due to lack of demand from buyers. Ferro manganese prices, assessed on 28 May, were in the range of INR 88,400-91,500/t ex-Durgapur and Raipur.
• Ferro chrome (HC60%) prices fell INR 5,400/t w-o-w to INR 119,600/t exw-Jajpur. Due to the decline in stainless steel prices, ferro chrome prices dropped.
• Ferro silicon prices fell due to demand-supply mismatch. Limited buying and strong selling pressure pulled down prices by INR 2,650/t week-over-week to INR 136,000/t ex-Guwahati.

Semi-finished Steel

Indian semi-finished steel prices decreased sharply, as per SteelMint assessment. Domestic billet prices fell by INR 4,800-6,500/t across regions with a major fall seen in Chennai and Hyderabad. Low demand and falling billet prices weighed on sponge iron offers, as prices declined by INR 2,400-3,500/t.

• Vedanta floated a 50,000 t export tender for pig iron for Jun’22 shipment. The tender is due on 28 May, sources informed SteelMint.
• Vizag Steel held an auction for 1,250 t of steel grade pig iron on 25 May with the floor price at INR 48,000/t but buyers showed no interest and the auction closed without a single bid being placed.
• SAIL held an auction for 6,000 t of basic grade pig iron on 26 May from the Rourkela Steel Plant (RSP). Buyers booked only 1,200 t at a weighted average price of INR 44,300/t exw, sources informed.
• Around 2,500 t of sponge iron deals were recorded this week to Nepal at around $400-410/t exw eastern India, equivalent to $420-430/t CPT Nepal for FeM 80% material (70% lumps and 30% fines).
• Indian steel grade pig iron prices fell by INR 5,500-6,200/t w-o-w. Prices plummeted on account of falling steel prices, improved supply amidst sluggish trends.
• Indian sponge iron export offers to Bangladesh fell $30/t w-o-w to $410/t CPT Benapole. About 8,000 t of deals were reported this week.

Finished Long
Induction furnace finished long steel prices fell across regions in India. The government’s announcement of export duties on iron ore, pellets and steel created panic in the market. The sudden decline in raw material prices impacted trades and owing to poor sentiments very dull spot buying enquiries in the long steel segment was observed.

In most markets traders were in wait-and-watch mode delaying procurement of material in bulk. Suppliers reduced offer prices and also offered trade discounts. However, after the sharp fall in prices market participants are now assuming that there would be some recovery in purchase enquiries and are waiting for clear market directions to emerge for the trade momentum to pick up, SteelMint learnt from sources.

• On a weekly basis, prices of rebar steel plunged INR 6,500/t.
• The trade reference price of Fe 500 grade rebar manufactured via the IF route for 10-25mm size was assessed at INR 49,500-49,900/t exw Raipur and INR 53,000-53,400/t exw Jalna.
• Trade discounts given by Raipur-based heavy structural steel manufacturers stood at around INR 1,000/t and the trade reference price of 200mm angles stood at INR 56,800-57,200/t exw Raipur.
• Trade discounts given by Raipur- based wire rod suppliers is at around INR 1,500/t and trade reference prices stood at INR 49,000-49,500/t exw Raipur, INR 49,700-50,000/t exw Durgapur, size 5.5 mm.

Finished Flat

The already sluggish market demand was further impacted by the government’s export duty announcement. More end-user industrial buyers moved to the sidelines anticipating prices to fall further in the coming weeks. Moreover, mills are likely to announce their list prices for June next week, which has kept the market waiting and trades fizzled out. Limited enquiries were reported from across markets tracked by SteelMint.

• The prices of value-added galvanised plain coil (GP), pre-painted galvanised iron (PPGI) and bare galvalume coils (BGL) dropped following the decline in demand from construction and allied industries. Distribution network participants are concerned ahead of the arrival of monsoons and the expected slowdown in infrastructure and construction activities along with the downward momentum in prices across the flat steel product portfolio.
• On the exports front, the slapping of export duty at 15% on clad, plated or coated flat rolled products of iron or non-alloy steel of 600mm in width or more forced the Indian steel majors to withdraw their offers from the overseas markets. “There were no export offers this week and mills are mostly busy figuring out the implications of the export duty on already concluded deals or for those which have the line of credits (LCs) opened,” shared a credible source.
• “With the levy of export duty on flat steel products, the exports of HRC are going to be slow exerting more pressure on the mills to sell domestically. Thus, having more supplies in the domestic market, the prices are likely to remain under pressure,” said a major distributor source from western India.