India steel index up for four consecutive weeks, longs lead the charge

• IF-route prices rise on raw material cost push
  
  
• Flats remain lacklustre, import jitters return
  
  
• Will mills hike list prices for Sep sales?
  
  

Morning Brief: The India Steel Composite Index has been on a positive trajectory for four consecutive weeks. It closed up 1% to 144.40 points for the week ended 25 August, 2023 against its previous close at 143.80 points.

The India Long Steel Composite Index performed rather well after a protracted bad show by remaining positive for two weeks in a row. On 25 August, it closed almost 2% up at 140.70 points (138).

The India Flat Steel Composite Index, however, remained flat w-o-w at 148.20.

Factors that pulled up the index last week

Longs

IF-route prices rise amid major orders: The induction furnace-route longs received a major boost last week. Rebar, wire rods and structural manufacturers bagged some major orders last week which boosted market sentiments. Thus, IF-route rebars, ex-Mumbai, rose INR 1,300/t w-o-w to INR 50,800/t. In fact, on a weekly basis, rebar prices increased sharply by INR 400-2, 700/t across regions.

Billet prices increase: Prices of domestic billets, a major intermediary for IF-route rebar, sharply increased by INR 350-1, 750/t across regions, fuelled by a raw material cost push.

Primary mills effect third hike in Aug: Seeing the hike in IF rebars, Indian primary mills increased their rebar list prices by INR 500/t ($6/t) for late-August 2023 dispatches. This was the third price hike during the current month.

Following this, trade-level prices of blast furnace (BF) route rebars rose w-o-w across major markets. Prices in the trade segment rose by INR 800/t ($10/t) w-o-w to INR 52,000/t ($629/t), exy-Mumbai and excluding GST, as per SteelMint's assessment on 25 August.

On cue, projects segment rebar prices also upped by INR 500/t to INR 50,000-50,500/t ($605-611/t) FOR Mumbai basis. Bulk project orders are still under negotiations, while spot demand was heard to be decent. Moreover, buyers became active amid the volatility in rebar prices.

Raw material cost push: Prices in the IF segment rose on a raw material cost push. Prices of iron ore fines (Fe 62%) showed a w-o-w uptrend. SteelMint's weekly Odisha iron ore fines Fe62% index rose by INR 200/t ($2/t) w-o-w to INR 4,400/t ($53/t) on ex-mines basis as on 19 August. Increased bids in OMC's fines auction pushed up the index.

Prices of sponge iron especially in Raipur (central India) rose, which impacted pricing and trades across other regions. Prices in Raipur rose by INR 1,550/t to more than INR 31,000/t. Overall, sponge prices increased by INR 800-1,800/t, with the major increase of around INR 1,800/t noticed in Raipur and Raigarh.

Flats

Trade-level prices range-bound: Trade-level prices of finished flat steel remained range-bound for the second consecutive week. Trade activities have improved slightly w-o-w. HRC prices were stable at INR 56,000-57,000/t ($678-690/t).

Imports bring back jitters: Some amount of hot rolled coil imports from Vietnam resumed, keeping flats producers jittery. HRC import bookings from Vietnam, aggregating 50,000 t, were concluded over the last seven days at a price range of $615-620/t CFR India, for early-to-mid October delivery. The landed cost works out to around INR 52,700-53,100/t exy-Mumbai ($635-640/t), which is still at a discount to domestic trade-level prices.

Exports still muted: Exports continue to stay muted. SteelMint's HRC (SAE1006) export index remained stable at $570/t FOB east coast for nine weeks in a row. None of the Indian mills have been offering in the Vietnamese and Middle East markets for months as these have become unviable. Vietnamese domestic HRC prices reduced for September and early-October sales close on the heels of Chinese mills reducing their offers by $5-10/t w-o-w to Vietnam and Middle East. Typhoons in China disrupted market sentiments. EU is still lacklustre amid summer vacations for Indian mills although a small parcel was booked at around $690/t CFR Europe.

Outlook

There is still scope of price hikes as market participants are waiting for mills' September price announcements.

Meanwhile, the buzz is mills may opt for possible list price hike for September sales.

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.