India: HRC, CRC trade market prices continue edging lower on low buying interest

The trade market prices of HRC and CRC continued moving downwards for the fourth consecutive week. Prices are weighed down by low buying interest amidst falling prices on the global platform as well as weakening of demand in both global and domestic trade markets.

SteelMint's benchmark price assessment for HRC stood at INR 70,500-71,500/t ($911-924/t), down INR 1,100/t ($14/t) w-o-w, while CRC prices fell by INR 1,300/t ($17/t) to INR 80,500-81,500/t ($1,040-1,053/t) w-o-w. Prices are basic excluding GST at 18% on exy Mumbai basis.

Trade market prices impacted by following factors:

1. Declining HRC export offers: Indian HRC (SAE1006) export index dropped further by $50/t this week to $860/t FOB east coast. Indian mills have been observing limited trade on the global platform, majorly to the Middle East and Europe. Current offers to the UAE have dropped by about $60/t to $890-920/t CFR from the pre-Eid holiday levels of $950-980/t CFR. Meanwhile, mills have held back from offering in the European market, rather than reducing their offers. The offer levels last tracked stood around $1,100-1,140/t CFR a week ago. However, trade sources reported the indications to be at the similar levels this week as well.

Meanwhile, Indian mills have resumed offering HRC (SAE1006) for exports to Vietnam this week with indications at around $850/t CFR. Notably, mills had stayed away from the market since early February 2022 as net sales realisations were quite low compared with Middle East and European markets.

2. Coking coal prices volatile: Imported coking coal prices continued to show volatility since the end of last week. The price of Australian-origin premium hard coking coal (HCC) which was assessed around $546/t CNF Paradip on 5 May 2022 dropped to $486/t CNF the next day but bounced back to $548/t CNF on 11 May 2022, before dropping again to $525/t CNF as on 12 May 2022.

3. Sluggish trade continues weighing on prices: The anticipation of a further decline in market prices in the upcoming weeks has made buyers tightening their hands and continue bargaining. This has further weighed on the offer levels of distribution network participants. "With the drop in this week's trade market prices, the gap has further expanded against what the mills are offering at to the distributors. Trades are happening but the volumes are relatively low with buyers procuring as per their urgent requirements only," said a major distributor from western India. It is to be noted that, the mills' list price for HRC stands around INR 76,000-76,500/t ($/t) exy-Mumbai basis, and exclusive of GST @18%.

Automobile production, sales decline: The production volumes of automobiles stood at around 1,874,461 units in April 2022, down by 4% against 1,960,398 units in March 2022. Meanwhile, a total of 1,421,241 units of automobiles were sold in April, out of which personal vehicles (PVs) were 251,181 units and two wheelers (2W) were at 1,148,696 units. "Sales of passenger vehicles are still below the April 2017 figures and those of two wheelers are even below the April 2012 figures" as per SIAM's press release. Also, on a monthly comparison, the sales volume stands lower by 10% for PVs and 3% for two wheelers.

Near-term outlook:
Slow trade market activites may lead to further price adjustments in the near term. Also, participants are hoping to get some relief from the mills as the gap between list price and trade prices is widening by every passing week.