India steel index stable w-o-w in dull market; slight demand uptick expected

• Tier-1 mills raise HRC, rebar prices
  
  
• Billets, sponge pull down IF-route rebar prices
  
  
• Price uptick likely as market braces for improved demand
  
  

Morning Brief: India's Steel Composite Index concluded at 148.8 points for the week ended 22 September, marking a slight 0.2% uptick from its previous value of 148.5 points a week ago. One can say, the index remained more or less stable w-o-w.

The India Flat Steel Composite index recorded a 0.5% w-o-w increase, to close at 152.1 points compared to its previous week's value of 151.3 points.

Conversely, the Long Steel Composite index experienced a marginal decline, settling at 145.7 points, which slightly tempered the overall growth in the India Steel Composite index from its week-ago figure of 145.8 points.

Factors that influenced the index last week

Flats

Tier-1 mills raise HRC prices: The interim price hike announced by some large Indian mills set the tone for the incline in the flat steel sub-indices. The mills had announced an INR 750/tonne (t) ($9/t) increase in list price of hot rolled coils (HRCs) effective from 21 September 2023.

Post-hike, the HRC price offered by one primary mill was at INR 59,250/t ($713/t) exy-Mumbai.

Trade-level prices edge up: However, distributors had already started quoting higher in the traders' market at the beginning of the week as they had received intimations of an impending price hike by mills.

Thus, trade-level prices of HRCs increased by INR 300-500/t w-o-w. Post-hike, SteelMint's benchmark assessment for HRC (IS2062, Gr E-250, 2.5-8mm) stood at INR 57,500-58,500/t ($692-704/t) exy-Mumbai towards the week's close.

The upcoming festive season led to a slight improvement in demand which started percolating down to the spot market, opined a few sources.

Exports market dull: Mills maintained silence in the HRC export markets of the European Union, Middle East and Vietnam. This resulted in no offers for the third consecutive week, with the India HRC (SAE1006) export index remaining unchanged at $580/t FOB east coast. Higher realisations in the domestic market compared with overseas kept mills enticed by the former.

Longs

Tier-1 mills raise rebar prices: Tier-1 mills raised list prices of blast furnace (BF)-route rebars by INR 900/t ($11/t). Post-hike, prices of BF rebars in the trade segment rested at INR 57,900/t ($697/t) ex-Mumbai.

Project segment prices also rose a further INR 500/t to INR 55,500-56,500/t ($668-680/t).

The hike was impelled by a cost push. Prices of the Fe62% iron ore fines rose by INR 350/t ($4/t) on a nudge from raised OMC auction prices. Australian premium hard coking coal (PHCC) prices rose a steep $23/t to $308/t CNF east coast amid limited availability and suspension of operations at some mines Down Under.

IF-route rebars prices decline: On the other hand, induction furnace-based rebar prices saw a decline of INR 300-1,400/t ($4-17/t) across most regions.

The drop was fuelled by 2 factors:

1) A decrease in the prices of semis, and sponge iron - two key raw materials. Domestic billet prices decreased by INR 200-1,200/t ($2-14/t), with a major decrease of INR 1,200/t seen in the eastern region. Similarly, sponge prices decreased by INR 200-1,000/t ($2-12/t), with the steepest fall noticed in Durgapur.

2) Demand was lacklustre. The two back-to-back festivals of Viswakarma Puja and Ganesh Chaturthi kept demand and offtake slow.

Since the IF-route rebars enjoy 65-70% of the market, a fall in these prices pulled down the overall longs index despite BF rebars rising by a steep INR 900/t ($11/t).

The monthly average gap between BF-IF rebars has now widened to around INR 4,000-4,500/t ($48-54/t) this month as against INR 2,000-2,500/t ($24-30/t) in the preceding month due to hike in rebar prices by primary steel makers.

Outlook

Mills may increase longs prices in the near term amid shortage of material and an expected pick-up in buying activities.

In flats, industry participants are expecting another list price hike in the first week of October.

Trade-level prices are likely to stay strong in the upcoming week as slow yet steady demand is the norm during the upcoming festive season - when automotive and white goods sales escalate.

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.

SteelMint 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, SteelMint 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.