India steel index stable w-o-w; thin trade in flats evens out improvement in longs

• Improved buying supports IF rebar offers
  
  
• BF mills cut rebar list prices for early-Dec
  
  
• Mills roll over flats tags, offer price support
  
  

Morning Brief: Signalling another dismal week, the India Steel Composite Index remained stuck at 130.1 points on 6 December 2024, unchanged as against the previous assessment on 29 November. The index had earlier straddled these levels in September 2024, ahead of the festive season-led restocking rush.

The sub-indices exhibited mixed trends w-o-w. Longs recovered by a slim 0.5% to 134.0, previously witnessed in August 2024. While the index found support in rebars and structure steel, which edged up by 0.8% and 0.4%, respectively, a 0.5% fall in wire rods pulled down the overall uptrend.

Conversely, flats fell by the same quantum as longs to 125.4, with similar levels last seen in November 2020. All sub-indices -- hot-rolled coils (HRCs), cold-rolled coils (CRCs), galvanised plates (GPs), and HR plates -- eroded by 0.3-0.8%.

Factors that impacted the index last week

BF rebar list prices cut for early-Dec'24 sales: In an attempt to revive trade momentum towards the year-end, Indian tier 1 mills cut rebar list prices for early December deliveries.

Tags were slashed by up to INR 1,500/tonne (t) ($18/t) m-o-m to around INR 53,000-54,000/t ($626-638/t) on landed basis. Consequently, trade-level prices edged down by INR 200/t ($2/t) w-o-w to INR 53,800/t ($636/t) exy-Mumbai, exclusive of GST at 18%.

Notably, as a direct consequence of weak demand, liquidity woes have beset blast furnace (BF) rebar mills. Additionally, inventories have piled up due to limited offtake, with volumes in early December increasing by 15% m-o-m. Compounding these woes have been smog-related construction bans, which have prevented headway in infrastructure and housing projects. All these factors together led BF mills to implement a price reduction.

In the project segment, prices fell by INR 1,000/t ($12/t) to INR 52,000-53,000/t ($614-626/t) FOR Mumbai, pressured by weak demand from end-users and liquidity issues.

IF rebars register marginal uptick: A positive trend in induction furnace longs was seen this week. For example, in Mumbai, prices edged up by INR 100/t ($1/t) w-o-w to INR 46,700/t ($552/t) exw, while Raipur, Durgapur, and Rourkela saw a rise of INR 200-1,400/t ($2-17/t).

Offers increased amid improved procurement from traders, with suppliers reporting moderate bookings till the middle of the week. Lifting of previously-booked material also resumed, which made market participants somewhat optimistic.

However, bookings slowed eventually, as buyers resisted higher offers and opted to wait for further clarity on market direction.

Mills roll over HRC, CRC tags: Certain leading flat steelmakers rolled over list prices for December 2024 compared with the previous month's closing. Post-revision, HRCs (IS2062, Gr E250, 2.5-8 mm) stood at around INR 47,000-50,150/t ($555-592/t) ex-Mumbai, while CRCs (IS513, Gr O, 0.9 mm) were at INR 53,200-57,150/t ($628-674/t) ex-Mumbai. Prices are for coil forms, excluding GST at 18%.

Additionally, some mills offered price support of about INR 600-1,250/t ($7-15/t) for November.

Trade-level HRC prices drop slightly: Trade-level HRC prices declined by INR 300/t ($4/t) w-o-w to INR 47,700/t ($563/t). The decline was caused by a number of factors.

First, worried about flagging demand among end-buyer industries, distributors in the traders' market kept their offers lower than mills' list prices.

Secondly, with bearish sentiments dominating the market, most buyers also kept order volumes low. "Negotiations for lower prices for smaller volumes increased with buyers exercising caution while making procurement decisions," informed a distributor from western India.

Thirdly, some distributors also expressed concerns about difficulties in recovering payments done on credit, signalling that the liquidity crunch that has been going on over the past few weeks is far from over.

Imports woes continue: Despite the gradual reduction in import volumes from September to November 2024, the substantial magnitude of HRC imports continues to be a concern for Indian flat steel stakeholders.

India's cumulative import volume based on BigMint's vessel line-up data stood at around 40,005 t till 5 December, with 197,442 t further expected during the month. Meanwhile, imports of 571,656 t were recorded in November 2024, slightly lower than 687,297 t in October and 776,835 t in September.

Inertia in HRC exports continues: Weak global market sentiments kept Indian HRC exports sluggish this week.

With the Middle East in a lull due to the National Day holidays, Indian mills sat out this week. Additionally, cheaper alternatives from China gave stiff competition. China's export offers were stable at around $525/t CFR UAE, while India's prices were indicated at around $545-550/t CFR UAE against $550-560/t heard previously.

The European market remained silent, adopting a wait-and-watch attitude amid trade restrictions.

Raw material prices edge down w-o-w: Raw material prices failed to offer support. BigMint's weekly Odisha iron ore fines Fe62% index dipped by INR 50/t ($0.6/t) w-o-w to INR 5,250/t ($62/t) ex-mines on 30 November amid sluggish trade activity and reduced material availability. Australian premium hard coking coal (PHCC) prices edged lower by $2/t w-o-w to $218/t CNF Paradip.

Outlook

Looking ahead, it seems that December may turn out to be another dreary month, with chilly demand keeping cheer away. However, although it is still too early to say, construction demand may improve, with a recent decline in air pollution in Delhi-NCR, where the Graded Response Action Plan (GRAP) has been eased from stage 4 to a less rigorous 2. Exports, on the other hand, are expected to continue languishing, with key geographies going into the Christmas-New Year holiday mood soon.