India: JSW Steel cuts HRC, CRC prices by INR 2,500/t ($33/t) for early Dec dispatches

India's leading private steel major- JSW Steel Ltd. has announced correction in the list price of HRC and CRC by up to INR 2,500/t ($33/t) for early Dec supplies. This move comes on the back of continual decline in global prices and sluggish domestic market over the past month.

The effective list prices stands at INR 67,500-68,000/t ($900-906) for HRC while INR 74,500-75000/t ($993-1,000) for CRC, sources informed SteelMint. Prices are on an exy- Mumbai basis, exclusive of 18% GST.

Reasons behind price revision for Dec'21 deliveries

Fall in global HRC export offers: There has been a continual decline in global HRC prices in the month of Nov'21. For instance, the Chinese HRC (SS400) export offers have slumped by $100/t to $775/t FOB by Nov-end, contrasted against $875/t FOB at the beginning. Furthermore, the prices have been on a decline for seven consecutive weeks since mid-Oct'21 when the prices were around $985/t. Also, SteelMint's India HRC (SAE1006) export index dropped by $15/t w-o-w to $800/t FOB east coast (ex-Mill realization INR 58,000-58,500/t), so clearly the focus is to liquidate inventories in the domestic market.

Revision in domestic iron ore prices: PSU miner NMDC has significantly reduced its iron ore lump (10-40mm, DR CLO, Fe 67%) prices by INR 870/t while those of fines (Fe 64%) by INR 200/t for Dec'21, with effect from 30 Nov'21. Also, the two auctions for iron ore fines held on 29 Nov'21 had failed to receive any response. Also, SteelMint's weekly Odisha iron ore fines and lumps indices fell by INR 200- 400/t w-o-w last week.

HRC import prices fall in a recent booking: An Indian importer is reported to have booked 20,000-30,000t HRC (IS 2062) at around $825-835/t CFR India, which translates to INR 62,500/t CFR levels. Falling global prices have weighed down imported HRC prices in India which may somehow keep domestic prices under pressure.

Sluggish demand weighs on trade segment prices:
The low buying interest among the trade market participants has continued to weigh on the trade reference prices for HRCs and CRCs. The trade channel participants had rushed to restock in the month of October on fear of price increases by mills and held decent inventories by November. The trade reference prices of HRC have dropped by INR 4,500/t while those of CRC by INR 5,000/t since the second week of Nov'21 in the Mumbai market.

Current week's trade reference prices:
SteelMints benchmark HRC (IS 2062, 2.5-8mm) prices were assessed at INR 67,000-68,000/t (down INR 1,300/t), while those of CRC (IS 513 Gr O, 0.9mm) were at INR 72,000-73,000/t (down INR 2,000/t). The prices mentioned above are on an exy-Mumbai basis, and exclusive of GST @ 18%.

Near-term outlook:
SHFE HRC Jan'22 futures contract settled at RMB 4,696/t on 02 Dec'21 remaining largely stable since early Nov'21. Thus, market participants expect less volatility in global prices in the near term. However, Indian domestic prices are trading at a premium against the landed cost of imports. Thus, domestic prices are likely to remain under pressure.