India: Slow demand pulls down trade level HR-Plate prices to 4-month low in July'24

• Monthly average HR Plate prices drop 4-month low, close to April 2023 levels
  
  
• Prices dropped around INR 850/t ($10/t) m-o-m in July 2024
  
  
• Lacklustre buying in the traders' market weighs on prices
  
  

The monthly average trade-level prices of hot-rolled (HR) plates (E250 Br, 20-40mm) in the Mumbai region have dropped to 4-month low levels close to that in December 2023. The monthly average prices of HR plates (E250 Br, 20-40mm) stood around INR 57,100/t exy-Mumbai levels in July 2024 declining by INR 850/t ($10/t) m-o-m.

BigMint's weekly assessment for HR plates (IS2062, Gr E250 Br, 20-40mm) stood at around INR 54,500-58,000/t ($651-693/t) exy-Mumbai, down by INR 100/t ($1/t) w-o-w on 24 July 2023.

On the other hand, weekly prices for hot strip mill (HSM) plates (IS2062, Gr- E250 Br., 5-10mm) dropped by a steeper INR 900/t ($11/t) to INR 52,500-53,500/t ($627-639/t) exy-Mumbai, taking a cue from the decline in hot rolled coil (HRC) prices.

(INR 1 = USD 0.0119481; USD 1 = INR 83.695314)

Factors behind the decline in prices:

Mills reduced prices for July 2024: Major plate producers announced a reduction in their list prices towards the end of the first week of July. Subsequent to the announcement the list prices of HR plates (IS2062, Gr E250 Br, 20-40mm) from the private producers stood around INR 56,250-58,000/t ($672-693/t) ex-Mumbai. For the early June 2024, these were around INR 58,800-61,500/t ($703-735/t) ex-Mumbai. The prices mentioned above exclude GST at 18%.

Infrastructure, and green energy segments slow slump in activities: The demand and pace of activity of the business-to-customer (B2C) segment clientele of mills, especially infrastructure and the green energy segments have started showing signs of slowing down. The pace of national highway construction eased to 646 kilometers (km) in June 2024 from the preceding month's 805 km as per the data from the Ministry of Road Transport and Highways (MoRTH).

Whereas in the green energy segment, the m-o-m increment in installed capacity of wind power eased to 234 megawatts (MW) in June (46656.37 MW) from the 275 MW added in April this year as per the Central Electricity Authority (CEA) data.

Furthermore, the onset of the monsoon season might further reduce the activities of the above segments, denting the plate demand generated from them. Similarly, the demand from end-buyers in the traders' market segment has also dropped further with inquiries dropping ahead of the season change, BigMint learned from distribution network sources.

The consumption of plates of thickness above 20mm started slowing down in April 2024 (0.358 mnt) and further dropped in May 2024 (0.340 mnt), as per the data from Joint Plant Committee. The production of plates through direct rolling of slabs increased 3% m-o-m to 0.483 mnt in May. June month updates shall be relayed in the upcoming few days.

3. Global plate prices ease off in July: Global plate prices have dropped in July as the demand slowed in the global trade platform. For instance, the monthly average of Chinese-origin heavy plates (SS400) export offers stood around $570/t FOB in March 2024, and has gradually dropped to $531/t FOB in July 2024, as per SteelMint data. This hovered around $545/t FOB in the preceding month.

The offers have dropped to $525/t FOB as on 24 July 2024, down by $5/t w-o-w.

Near-term outlook:

Trade market prices are likely to soften further considering the decline in global plate prices and the low buying appetite in the domestic market. Another factor that would weigh on the prices and demand is the seasonal obstruction brought in by the monsoon season which spans over July-September month.