India: HR-plate prices remain firm amidst Covid induced disruptions

Domestic HR-plate prices are holding steady this week in the traders' market due to the stalled market activities towards the end of April amid Covid lockdown.

SteelMint's benchmark assessment for the HR-plate (IS 2062/E350) for 5-10mm continues to hover at INR 64,000-64,500/t (exy-Mumbai). The prices mentioned above are exclusive of GST @ 18%.

However, the domestic market is witnessing a reduction in buying intent due to the stalled open market activities in various regions on the back of surging infection cases and containment measures laid down by the provincial government.

Delhi and Mumbai regions are seeing exponential growth in infection cases hampering trade activities. There is no such market activity or demand in Delhi due to the current lockdown from 20th April to 2nd May, SteelMint learned from its credible trade source based in Northern India. Furthermore, the lockdown in Mumbai is likely to be extended till 15th May.

'Mills may increase prices in May '21'

Bullish sentiments in the global market will be compelling mills to increase in list prices in May '21. Alongside this, the anticipation of improvement in demand in the near term with growth in the construction and shipbuilding sector may lead to further increase in prices.

The factors driving HR-plate prices are as follows:

1. Good monsoon brings hope for the tractor market- India's largest tractor maker, Mahindra & Mahindra is expecting strong growth momentum in the first half of FY '22 as higher price realization and healthy rabi output is expected to drive demand. Operating over 100% capacity in FY '21, Mahindra & Mahindra did undertake a series of de-bottlenecking measures which will enable the company to meet higher demand in FY '22.

2. New orders in the construction sector- JMC Projects India wins new construction orders worth INR 1,262 crore. Out of this, INR 1,059 crore is for building projects in India, while the rest of the amount is for the water project in the Maldives.

The international order in the Water business is a milestone in their growth journey and marks their entry into the Maldives for the first time.

3. Shipping industry poised to show strong performance- The shipbuilding industry is also being impacted by the diversion of oxygen towards life-saving amid surging COVID cases in India. However, industry participants opine that the profitability shall not go down, SteelMint learned from media reports.

Anil Sharma (CEO, Global Marketing Systems Inc.) stated in a media report that, "Profitability of the ship-recycling industry won't go down. Oxygen shortages in India should ease in a few weeks with an acceleration in the setup of production plants, but supply of ships may be limited."

Also, stepping up a ladder amid the surging infection, the owners of marine freight vessel along with cruises (and other passenger ships) are now seeking vaccinated crew members for their business operations.

"If you want to continue to be a seafarer, then you need to get vaccinated; companies are only giving employment to those who have taken their vaccine doses," said Abdulgani Serang, general secretary-cum treasurer of the National Union of Seafarers of India (NUSI).

4. Global plate offer continues to rise- The prices in the overseas markets are soaring higher with the rise in raw material costs, disrupted supplies and change in government policies. This has increased the gap between overseas and domestic plate prices in India.

This week, Chinese plate exporters raised their offers to $850-880/t FoB China as against $850-870/t FoB basis in the previous week. Also, the Ministry of Finance of the People's Republic of China has announced the cancellation of export tax rebates for certain steel products including plates which shall be effective from 1st May '21.

Outlook

It would be interesting to watch the market movement in the upcoming weeks, while the market activities are facing hurdles, and investments in core steel-consuming sectors have seen an increase since Jan '21.

On the road ahead, a few trade market sources shared- "The prices are expected to rise with the production constraints and hindrances in allied industry services impacting supplies amid surging cases. Meanwhile, the market shall open with an increase in prices and restocking demand."