India: Domestic HR plate prices rise despite low buying appetite

Domestic hot-rolled (HR) plate prices moved up by INR 700/t after three weeks of continual decline. However, end-user demand continues to remain subdued and is weighing on trade activities.

For week 37 (6-11 Sept'21), SteelMint's assessment for HR plates (IS 2062/E250, 5-10mm) stands at NR 65,500-66,500/tonne (t) compared to INR 64,500-65,500/t exy-Mumbai a week ago. Prices are basic excluding GST at 18%.

Some plate-consuming segments are showing improvement in activities:

1. Construction industry
Increase in investments across segments in Aug: There has been a 9%, m-o-m, increase in investments aggregating INR 84,200 crore in the construction and infrastructure segments in Aug, as per a recent report by Dolat Capital Markets Pvt. Ltd. This growth has come majorly on the back of road, manufacturing and power segments.

2. OEM industry
a) Construction equipment (CE) manufacturers roll out newies in Sept: The construction equipment manufacturers have come forward with new launches. Hyundai CE India launched an excavator early this year and three new attachments recently in Sept, while Volvo CE has launched two new wheel loaders. Also, Tata Hitachi came out with the new CEV-4 or Bharat Standard (BS)-4 compliant wheel loader early this month. Thus, demand for plates shall remain supported with the production of these variants.

b) Commercial vehicle sales rise: As per the latest data released by the Federation of Automobile Dealers Associations of India (FADA), the commercial vehicles segment reported a growth of 2% on a monthly basis to 53,150 units in Aug as against 52,130 units a month ago.

China's heavy plates export offers fall, third week in a row:
This week, Chinese mills are offering heavy plates at $900-915/t FOB China, $5-10/t lower than $910-920/t FOB the previous week. Weak overseas demand as a result of the uncertainty around China's export tax policy has pulled down offers.

Outlook:
On one hand, there are increasing investments in the construction segment dragging the yellow goods or OEMs with them, while on the other sluggish demand persists in the trade segment.

"The demand for finished flat steel products is still weak across product categories. We shall have to wait and see whether the increase in price sustains," said a distributor from western India.