India: Steel majors cut HRC list prices by up to INR 3,500/t m-o-m for Aug'22 sales

Indian steel majors have lowered their list prices of hot-rolled coils (HRCs) by up to INR 3,500/t ($44/t) and cold-rolled coils (CRCs) by up to INR 2,650/t ($34/t) for early-August sales as against the previous month's prices. Post revision, prices of HRC (IS2062, 2.5-8mm) stands in the range of INR 58,000-58,500/t ($733-740/t) and CRC (IS513 Gr O, 0.9mm) at INR 65,350-66,500/t ($826-841/t) depending upon mills. Prices are on an exy-Mumbai basis, exclusive of GST @ 18%.

In July, HRC prices were set at INR 61,000-62,000/t ($771-784/t) and CRC at INR 68,000-69,000/t ($860-872/t) on an exy-Mumbai basis, excluding GST @ 18%.

Factors weighing on the price levels-

1. Continual decline in trade prices: Prices of HRC and CRC have been sliding down after hitting the peak of INR 78,800/t ($996/t) and INR 89,000/t ($1,125/t) respectively on 6 April 2022.

Furthermore, on a monthly average basis, HRC prices have dropped by INR 2,700/t ($34/t) from INR 62,000/t ($784/t) in June 2022 to INR 59,300/t ($750) in July 2022. Meanwhile, CRC prices have dropped by INR 2,500/t ($32/t) to INR 67,900/t ($858/t) in July from the level of INR 70,400/t ($890/t) a month ago.

Moreover, this week, SteelMint's benchmark price assessment for HRC (IS2062, 2.5-8mm) fell by INR 400/t ($5/t) w-o-w at INR 57,000-58,000/t ($721-733/t), while CRC (IS513 Gr O, 0.9mm) prices are at INR 67,000-68,000/t ($847-860/t), down by INR 100/t ($1.3/t) w-o-w. Prices are exy-Mumbai, excluding GST at 18%. However, the decline was lesser as compared to the drop of INR 7,800/t ($99/t) in HRC and INR 9,400/t ($119/t) in CRC from May to June this year.

2. Export duty impacts offers from Indian mills: Overseas trade have taken a hit since the government announced export duty @15% on clad or plated non-alloyed steel products in late May 2022. Since then, the offers have remained under pressure while volumes took a hit as mills started offering alloyed or boron added HRCs. The key markets of Middle East, Europe and Vietnam have seen less import bookings for Indian-origin HRC.

This led to inventory pile up, exerting pressure on mills to sell in the domestic market. SteelMint's India HRC export index was assessed at $565/t FOB east coast India, down by $18/t w-o-w. Moreover, this is significantly down by $256/t from the level of $821/t FOB assessed on 17 May 2022, just few days before the price announcement.

3. Raw material prices: Raw material prices have remained under pressure. For instance, the imported premium hard coking coal (HCC, Australian origin) price has been on a continual decline since 14 June 2022 when prices were $410/t CNF Paradip India. The offers, since then, have dropped by $201/t to $209/t CNF as on 3 Aug'22. On a weekly average basis, prices have decreased steeply by about $327/t from $554/t CNF in mid-May to $227/t CNF in end-June.

Also, the Odisha iron ore index (Fines Fe 63%) has shown a steep decline from INR 5,900/t ($75/t) as on 14 May 2022 to INR 3,500/t ($44/t) on 25 June 2022. However, the index slowly improved to INR 4,050/t ($51/t) as assessed on 30 June 2022.

Near-term outlook
Most of the steel manufacturers have been curtailing their production volumes since mid-July to counter the impact of the slow demand and continual decline in prices in the overseas and domestic market. Industry participants opine prices shall stabilise now as there has not been any major drop in July barring that in the previous week. "Prices have come close to bottom, while supplies are getting constrained. Also, little improvement in demand was seen in July which is likely to continue into August," informed a few distributors from north and western regions.