India steel index holds firm w-o-w; market sees slow start to CY'25

• Long steel index up 0.5%, flats stable w-o-w
  
  
• BF mills mull hikes in Jan'25 rebar list prices
  
  
• Primary mills roll over HRC prices for Dec'24
  
  

Morning Brief: The New Year started on a mellow note for the Indian market, with BigMint's Steel Composite Index crawling up by 0.3% w-o-w to settle at 129.0 points on 3 January 2025.

Interestingly, all sub-indices either recorded increases or were stable w-o-w, in what may be early signs of a gradual improvement in trade momentum.

Longs rose by 0.5% on the back of a slight growth in the rebar, structural steel, and wire rod indices to the tune of 0.3-0.5%. However, flats held firm w-o-w. While cold-rolled coils (CRCs) and hot-rolled (HR) plates were up by 0.2-0.3%, stability in galvanised plates (GPs) and hot-rolled coils (HRCs) balanced these out.

Notably, the index has remained range-bound at 128-129 over the past four weeks. These levels correspond with those recorded over four years ago, during December 2020.

Factors that impacted the index last week

BF rebar prices rise w-o-w as trades pick up: Blast furnace (BF) rebar prices received a boost from a pick-up in market activity in some regions. Trade-level prices stood at INR 52,600/tonne (t) ($625/t) exy-Mumbai, exclusive of GST at 18%, on 3 January 2025, reflecting a rise of INR 300/t ($3/t) w-o-w.

In addition to increased trades, prices were lifted by the following developments: First, BF mills were mulling hikes in rebar list prices for January 2025 dispatches. To illustrate, JSW Steel raised rebar prices by INR 1,000/t ($12/t) to INR 52,500-53,000/t ($612-618/t) for early-January 2025 sales. Other mills are expected to announce new list prices imminently.

Secondly, mills likely felt encouraged by the fact that their inventories declined by around 30% m-o-m in early January.

Project prices were at INR 49,500-50,500/t ($577-589/t) FOR Mumbai. Buying was higher w-o-w, and decent volumes were booked at current prices.

IF rebar prices edge up w-o-w: Trade-level induction furnace (IF) rebar prices stood at INR 47,500/t ($554/t) exw-Mumbai on 3 January 2025, up by INR 200/t ($2/t) w-o-w.

IF rebar tags inched up as manufacturers marked up prices following strong bookings last week. However, buyers were unwilling to procure material at these levels, which resulted in a bid-offer disparity and, consequently, slow trade activities. Raw materials also failed to offer support, with prices of Odisha iron ore fines and Australian premium hard coking coal lower w-o-w.

HRCs range-bound as mills roll over list prices: Prices of HRCs were range-bound w-o-w across India, showing mixed trends, except in the northern belt, in which higher prices persisted. In Mumbai, benchmark trade-level HRC prices were down by INR 200/t ($2/t) w-o-w to INR 46,500/t ($542/t) exy on 31 December 2024.

Relative stability emerged primarily because of two factors. First, leading flats manufacturers rolled over m-o-m list prices for December 2024. Effective prices of HRCs (IS2062, Grade E250, 2.5-8 mm) stood at INR 47,000-50,150/t ($548-585/t) ex-Mumbai.

Secondly, bid-offer disparities surfaced as prevailing offers, which ranged high, failed to gain acceptance in the market. Earlier, prices had been raised following the government's initiation of a safeguard investigation into steel imports. As buyers remained resistant to the current high price levels, mostly small volumes were traded, that too at lower values.

Northern India, however, continued to see transactions at higher offers, due to a localised supply squeeze.

HRC imports decline: The HRC market's import burden continued to ease. December closed with import volumes of bulk HRC and plates standing at 485,449 t, according to bulk vessel line-up data maintained with BigMint. In comparison, India imported 571,656 t in November and 687,297 t in October. Approximately 171,453 t are set to arrive by the first week of January.

Holiday mood curbs HRC export activity: New Year festivities stalled India's HRC export momentum, as most participants in the Middle East and Europe logged off from trades.

Indian export offers to the Middle East declined to $535-540/t CFR UAE against $540-545/t a week ago. Limited transactions were recorded, as several buyers opted to postpone procurement decisions until after the holiday period. Chinese offers were steady w-o-w at $515-520/t.

Meanwhile, India's offers to Europe remained steady w-o-w at $590-595/t CFR Antwerp. Besides dwindling engagement due to the festive mood, anti-dumping investigations and extended lead times kept trading activity in check.

Outlook

Prices are expected to move within a narrow range, with nominal increases likely.

Winter generally sees an uptrend, as it is the peak steel production and consumption season for India. With improving construction activity, prices of long steel are expected to increase. Flats producers have also been heartened by the initiation of the safeguard duty investigation. However, they are a little unsure now given that the deadline for relevant document submission has been pushed back. Plus, the impact of the Karnataka minerals Bill 2024 is still up in the air. The export market is also expected to be subdued amid the holiday season and continuing pressure from China.

India Steel Composite Index

The India Steel Composite Index is assessed on a weekly basis, every Friday at 18:30 IST, as per the weighted average prices based on manufacturing capacity and production.

BigMint considers the Composite Index with the base year being 3 January 2020 (financial year 2019-2020) and the base value as 100. The Composite Index does not give the absolute price but a trend of the market. The Indian steel industry is broadly classified into the BF-BOF and the electric/induction furnace routes. Keeping this broad classification in view, BigMint proposes to release the Composite Index by considering both production routes by manufacturing capacity and the production weighted method to compute the index for India.