India: Domestic HRC, CRC trade prices decline further on limited market activities

The domestic market activities remained slow since the beginning of this week with buyers turning to the sidelines and awaiting price announcements by mills in the coming week. This, further, weighed on the prices of hot-rolled coils (HRC) and cold rolled coils (CRC).

SteelMints benchmark HRC (IS 2062, 2.5-8mm) prices were assessed at INR 68,500-69,500/tonne (t), (down INR 2,200/t w-o-w) while those of CRC (IS 513 Gr O, 0.9mm) at INR 74,000-75,000/t (down, INR 1,300/t w-o-w). Prices mentioned above are on an exy-Mumbai basis, and exclusive of GST @ 18%.

What has drawn the markets slow?

Continual decline in global HRC prices: The global HRC market tumbled with a fall in export offers from the major import destinations vis. Japan and South Korea. Furthermore, a continual decline in offers for Chinese HRC (SS400) over the past six weeks weighed on domestic market sentiments. As of the current week, export offers from Japan and South Korea stand at around $930-940/t FOB, while those from China are at $775-785/t FOB.

Declining raw material prices: Prices of iron ore fines (Fe 63%) in India dropped by about INR 900/t, continuing its downtrend since the last week of Oct'21. SteelMint's weekly Odisha iron ore fines (Fe 63%) prices stand at around INR 6,000/t (ex-mines, including royalty, DMF and NMET) as assessed on 20 Nov'21. Meanwhile, imported Australian origin premium hard coking coal (HCC) prices stand at around $337.05/t CNF Paradip as on 24 Nov'21 against $431.50/t on 1 Nov'21.

Near-term outlook
In talks with distributors, it is learned that at present, China is offering HRCs at $810/t CIF India basis (equivalent to landed cost of INR 66,700/t, exy-Mumbai), which is competitive against domestic trade market prices. Even though imports seem lucrative, buyers remain observant in anticipation of a further decline in domestic prices while awaiting price announcement from mills for Dec'21 shipments.