India steel index stable w-o-w, closes CY'24 at 4-year-lows
...
- BF rebar declines as buyers move to sidelines
- IF rebar prices fluctuate amid need-based buying
- HRC offers see increase but buyers steer clear
Morning Brief: The India Steel Composite Index ended 2024 stable w-o-w, up by a negligible 0.1% to 128.6 points on 27 December. Currently, the index is languishing at its lowest in over four years, last seen in December 2020.
Over the year, the index failed to lift itself beyond the mid-140s, largely inhabiting the 130-zone. In December, the index mostly remained range-bound at 128.
Last week, flats fared better than longs, with the former up by 0.7% while the latter was down by 0.4%. Among the flats sub-indices, hot-rolled coil (HRC) climbed up by 1.1%, with cold-rolled coil (CRC) and galvanised plates (GP) also exhibiting uptrends. The longs sub-index was in the red across categories, pulled down the most by the rebar index, which eroded by 0.4%.
Factors that impacted the index last week
BF rebar downtrends for 7th straight week: Subdued demand continued to hound the blast furnace (BF) rebar segment, keeping prices on a downtrend for the seventh consecutive week. Trade-level prices edged down by INR 100/t ($1/t) w-o-w to INR 52,300/t ($612/t) exy-Mumbai, exclusive of GST at 18%.
Buyers stayed away from the market amid weak sentiments, waiting for the downward pressure to alleviate.
Limited buying interest kept the project segment under strain, with prices falling w-o-w to around INR 49,500-50,500/t ($580-591/t) FOR Mumbai.
IF rebar prices show mixed trends: Muted demand clamped down on trading activity in the induction furnace (IF) rebar market, resulting in need-based procurement. Prices showed mixed trends, declining in major markets such as Raipur, Hyderabad, Chennai, Muzaffarnagar, and Delhi. However, tags were stable w-o-w in other regions such as Mumbai.
Additionally, producers rolled over list prices but are offering discounts to liquidate inventories. Inventory idling time was at around 10-12 days across markets compared to 12 last week.
IF-rebar trade prices remained stable w-o-w at INR 47,300/t ($553/t) exw-Mumbai as on 27 December.
HRC offers rise but fail to gain acceptance: HRC prices increased by up to INR 500/t ($6/t) w-o-w to INR 46,700-48,500/t ($547-568/t).
The trade segment, whose spirits were raised by the safeguard duty investigation, hiked offers in anticipation of a pick-up in demand. However, buyers decided to give these a wide berth, especially amid a persistent liquidity crunch. There was limited upward price pressure outside of northern India.
The market is under considerable pressure to improve cash flow during the final quarter of the year. Additionally, the market is looking forward to mills' January list prices.
Meanwhile, CRC prices were range-bound w-o-w at INR 53,400-58,800/t ($625-689/t) across markets.
HRC imports continue but at slower pace: Till 23 December, imports of bulk HRCs and plates stood at 277,175 t as per BigMint's vessel line-up data. Around 89,717 t more are expected by the month-end. In comparison, India logged 571,656 t in November, 687,297 t in October, and 776,835 t in September. December's volumes are substantially lower but still formidable.
HRC export market remains silent: The Christmas mood kept the export market largely deserted, with most buyers away for the holidays. Trading activity came to a standstill, and export offers remained stuck at the preceding week's levels of $540-545/t CFR UAE for the Middle East and $590-595/t CFR Antwerp for Europe. In contrast, Chinese exporters reduced their offers to the Middle East by $5/t w-o-w to $515-520/t CFR UAE in response to subdued demand.
Meanwhile, in a promising development, ArcelorMittal, the largest steel producer in Europe, raised HRC prices by around EUR 30/t ($31/t) for February-March 2025 deliveries, in expectation of stronger apparent demand from the automotive industry in the first quarter of 2025.
Outlook
In 2024, the steel industry was laid low by persistent dull demand and an unabated stream of imports from countries such as China, South Korea, and Japan. While the volume has been scaled down, it still remains at a troubling level. In parallel, prices witnessed a steep downtrend, with many players unable to recover production costs and keep margins viable. Additionally, a liquidity shortfall emerged by the end of the year, leaving market players at their wit's end over how to continue operations. Even exporters are unsettled at the moment, with anti-dumping investigations, competitively priced Chinese imports, and slack demand mounting substantial hurdles.
Recently, the government's proposal to impose safeguard duties on steel imports has brought relief to the market. However, restrictions on the import of low-ash met coke and additional taxes on mineral-bearing land in Karnataka may turn out to be a thorn in the side of steelmakers. Looking ahead at the near term, 2025 is set to begin on a subdued note, with demand failing to pick up significantly. A happy new year may not be on the cards for steelmakers.
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.
