India: HRC trade market price plunges INR 7,800/t ($99/t), m-o-m, in June

• Subdued domestic, overseas demand weighs on prices
  
  
• Raw material prices under pressure
  
  

Domestic prices of HRC (IS2062, 2.5-8mm) have dropped by about INR 7,800/t ($99/t) in June, 2022 to INR 62,000/t ($785/t) compared to INR 69,800/t ($884/t) a month ago.

Slow demand in both the overseas and domestic markets has weighed on prices lately. The announcement of 15% export duty on clad and / or plated non-alloyed flat steel products on 21 May weighed on export volumes as well.

SteelMint's weekly benchmark price assessment for HRC decreased by INR 1,100/t ($14/t) to INR 60,000-61,000/t ($760-773/t), while CRC prices fell by INR 500/t ($6/t) to INR 68,000-69,000/t ($861-874/t). Prices are on an exy-Mumbai basis, and exclusive of GST at 18%.

Reasons behind price decline

• SteelMint's India HRC export index drops sharply after export duty announcement
  The aftermath of 15% export duty on non-alloyed flat steel products saw a temporary withdrawal of the Indian steel mills form overseas markets. Two weeks down the line from the date of announcement, steel mills resumed offering alloyed HRC (boron added) for exports to the markets of Europe, Vietnam and the Middle East. 

  Slowdown in overseas demand owing to various factors such as inclusion of Vietnam-origin galvanised products in the European Commission's country-specific quotas and high power costs in the European Union (EU) weighed on price indications to these countries. Moreover, limited appetite in the UAE, focus on domestic procurement in Vietnam and low acceptance of boron-added HRC have been the other major factors.SteelMint's India HRC export index dropped by a significant $161/t to $660/t FOB east coast India as on 28 June from $821/t on 17 May.
  
  

These factors along with the continual decline in HRC prices globally dented domestic market sentiments.

• Odisha iron ore index sinks to nearly 2-year low
  Iron ore prices in India have dropped rapidly over the last one month or so. The rapid decline is nowhere more evident than in Odisha, a state that accounts for over half the country's annual iron ore production. SteelMint's benchmark Odisha iron ore fines (Fe62%) index has slipped to nearly the lowest level in two years. The index was assessed at INR 3,150/tonne (t) ex-mines (including royalty and other statutory cesses) on 18 June. It deserves mention that the index has fallen from over INR 6,000/t in February-March.
  
  
  
• Australian coking coal prices fall 21% in H1CY22
  In the last week of May, the Indian government announced its decision to impose an export duty on steel which greatly impacted Australian coking coal demand. It is to be noted that India - the world's second-largest steel producer - procures 75-80% of its coking coal requirement from Australia. Prices touched an all-time high level of over $650/t in March amid the Russia-Ukraine conflict but then cooled off to settle at $350/t levels in the last week of June.
  
  
  

Lean demand from end-user industries
It may be recalled that end-users refrained from procuring throughout April-May because prices were too hot to handle. In June, they waited for further price correction and in July too demand is expected to be weak. However, August onwards, in view of low trade-level inventory, a pick up in demand can be expected. The monsoon starts ebbing in some parts of the country by end-August, which may lift construction demand.