India: Tier-1 mills cut rebar prices, m-o-m, for early September

Indian primary steel producers have recently announced their list prices of blast furnace (BF)-route rebar for early-September, 2022 sales, sources informed SteelMint. Mill-wise effective prices are as below:

• Jindal Steel and Power Ltd (JSPL): INR 57,500-58,000/t ($720-727/t) ex-Delhi
  
  
• Steel Authority of India (SAIL): INR 57,000-57,500/t ($714-720/t) ex-Delhi
  
  
• JSW Steel: INR 56,500/t ($708/t) ex-Mumbai
  
  
• The prices are exclusive of 18% GST
  
  

Meanwhile, trade prices hit an 8-month low of INR 56,000-56,500/t ($702-708/t) ex-Mumbai, as assessed on 2 September, falling from the peak of INR 74,000/t ($927/t) in early-April. Notably, similar levels were last seen in end-January.

Why are prices sliding?

1. Drop in raw material costs: Steelmaking raw material such as iron ore and coking coal prices have been declining. Coking coal prices dropped gradually as the Russia-Ukraine war impact subsided as a result of which panic buying from Europe stopped. On the other hand, Indian steel mills went into maintenance and delayed their coal procurement on weak domestic steel demand.

Coking coal (Australian Premium HCC) prices dropped to $260/t CFR Paradip in August, after hitting an-all time high of $620/t CFR in March, a decrease of more than 55%.

SteelMint's weekly Odisha iron ore fines (0-10mm, Fe 63%) index, on the other hand, dropped from INR 3,880/t ($49/t) in July to INR 3,760/t ($47/t) in August. These prices are on ex-mines basis and include royalty and other statutory cesses.

2. Fall in IF rebar trade prices: The fall in induction furnace (IF)-route rebar prices from INR 68,500/t ($858/t) in March to INR 55,800/t ($699/t) in August, and further to INR 55,500/t ($695/t) in early-September did not provide support to BF rebar prices, considering that about 60-70% of the rebar market share is held by the IF steel producers.

Moreover, in India, the July-September quarter witnesses seasonal slow demand for steel as construction activities and transportation are generally impacted.

However, demand from the project sector seems to be improving. Current prices for the sector are heard to be at around INR 55,000-56,000/t ($689-702/t) levels on landed basis.

3. Impact of export tax: Rebar export volumes have been on a continual decline since the government imposed 15% export duty on steel. On yearly basis, exports have dropped from 155,330 t in July 2021 to just 11,609 t in July 2022, down over 90% y-o-y.