India steel index remains flat w-o-w, lacklustre demand weighs on prices

• HRC tags range-bound but Mumbai sees rise
  
  
• Need-based buying pressures IF rebar prices
  
  
• Jan's HRC imports likely to be lowest in FY'25
  
  

Morning Brief: BigMint's India Steel Composite Index remained level w-o-w at 127.9 points on 24 January 2025. While the downtrend seen over the past two weeks came to a halt in the latest assessment, the market remains in a bear grip due to doggedly weak demand.

Among the sub-indices, a 0.2% improvement in longs cancelled out a dip in flats by the same degree. Structure steel rose by 0.8%, which helped prop up the longs index, while flats were weighed down largely by a 0.6% decline in the cold-rolled coil (CRC) index.

Importantly, the composite index remains at over a four-year low.

Factors that impacted the index last week

HRC trade prices range-bound, but Mumbai sees uptick: Trade market hot-rolled coil (HRC) and CRC prices remained range-bound w-o-w.

However, BigMint's benchmark assessments (bi-weekly) for HRCs increased by INR 800/tonne (t) ($9/t) w-o-w to INR 47,400/t ($550/t) on 25 January. Meanwhile, CRC prices remained stable w-o-w at INR 53,600/t ($622/t). These prices are quoted ex-Mumbai for the distributor-to-dealer segment and exclude 18% GST.

Mumbai's prices increased due to two factors: First, as no new import bookings were heard, the inventory of imported HRCs has begun to deplete, impacting trade prices. Secondly, rampant speculation has been taking place such as on the imminent imposition of a safeguard duty and an increase in list prices for February sales. There also has been some buzz about fairly good demand emerging from various regions.

However, many other sources pointed out that the ground reality is somewhat different than what is being projected.

BF rebar prices drop as demand fails to pick up: Persistent subdued domestic demand forced traders across markets to clip blast furnace (BF) rebar tags. Additionally, leading mills pruned their list prices for end-January dispatches, sources informed.

Furthermore, raw material prices failed to provide cost support, with Odisha iron ore fines falling by INR 200/t ($2/t) w-o-w to INR 5,000/t ($58/t) on 18 January and Australian premium hard coking coal dropping $4/t w-o-w to $205/t CNF Paradip.

Notably, in a significant departure from previous years, January has seen largely feeble demand in the trade channel. Usually, long steel demand picks up in the winter, as builders and construction companies prefer to take advantage of the relatively placid winter weather to make good progress on their projects. However, this year, buyers have mostly retreated from active trading, demoralised by the steadily dampening market sentiments.

However, Mumbai bucked the downtrend again. Trade-level BF rebar prices remained unchanged w-o-w at INR 52,200/t ($606/t) exy, exclusive of 18% GST, as per BigMint's assessment on 24 January.

In the project segment, prices fell to around INR 48,500-49,500/t ($562-574/t) FOR Mumbai compared to around INR 49,500-50,500/t ($572-583/t). The fall in prices put buyers on guard, and consequently, the market witnessed need-based procurement.

Need-based buying keeps IF rebar prices range-bound: Induction furnace (IF) rebar trade prices showed mixed trends across India but largely hovered at the previous week's levels.

Subdued demand continued, but need-based procurement the kept trade momentum going in different markets. To spur sales, manufacturers offered trade discounts. Inventory idling time was at around 12-14 days across markets compared to 10-12 days a week ago, indicating manufacturers faced greater difficulty in moving material.

In the Mumbai market, generally taken as the benchmark, IF rebar prices edged down by INR 100/t ($1/t) w-o-w to INR 46,900/t ($544/t) exw.

However, there were slight hikes in clusters such as Durgapur, Rourkela, Raipur, Muzaffarnagar, Bangalore, Delhi, and Jalna. These contributed to the 0.1% increase in the rebar index. Notably, IF rebars command a 65-70% share of the market, so their prices are given greater weight while calculating the index.

Monthly HRC imports expected to fall to their lowest in FY'25: Encouragingly, January may end up with the lowest import volume in FY'25. So far, till 20 January, imports of bulk HRCs and plates have been assessed at 339,801 t, as per vessel line-up data maintained with BigMint. An additional 99,028 t are expected to arrive by the month-end. In comparison, India racked up 473,222 t in December, 571,656 t in November, and 687,297 t in October.

HRC export offers to ME drop: Indian HRC export offers showed divergent trends this week. Offers to the Middle East (ME) dropped by $10/t w-o-w to $520-525/t CFR UAE, while mills did not actively offer material to Europe due to cautious buyer sentiment, driven by the ongoing anti-dumping investigations, prolonged lead times, and limited demand. Last heard indicative offers hovered at around $590-595/t CFR Antwerp for S275, 3-mm material.

While Chinese HRC export offers to the ME rose by $20-25/t w-o-w to $505-515/t CFR UAE ahead of the Lunar New Year holidays, offers were still below Indian mills' quotes.

Outlook

The outlook for the market remains bearish, with prices expected to hover within the same range or trend down.

As for HRCs, the sustainability of the increase in ex-Mumbai trade prices is a big challenge. Pan-India, there is a lack of demand, coupled with liquidity issues, as credit recovery is slow.

Additionally, the rebar market is bracing for slower proceedings, and prices may trend down as a result.

The downward pressure on HRC exports will also likely not ease, and India may close the month with minimal volumes shipped.

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.