India: Steel mills cut coated flat steel prices by up to INR 3,000/t, domestic trade prices hit 2-year lows

India's coated flat steel producers cut their list prices by around INR 3,000/t m-o-m for early December sales earlier this week. Meanwhile, trade reference prices have dropped to around two-year lows, as per SteelMint records. Lacklustre buying in both domestic and overseas markets, along with declining raw material prices, have weighed on the prices.

Subsequent to the revision, the list prices for early-December sales are as below:

• JSW:
  GP (0.8mm, 80gsm): INR 65,800/t
  PPGI (0.5mm, 90gsm): INR 77,000/t
  BGL (0.5mm, AZ70): INR 77,500/t
  BGL (0.5mm, AZ150): INR 80,500/t
  
  
• AM/NS India:
  GP (0.8mm, 80gsm): INR 63,250/t
  PPGI (0.5mm, 90gsm): INR 74,250/t
  
  
• Prices mentioned are on an exy-Mumbai basis, excluding GST @ 18%.
  
  

Why have mills reduced prices?

1. Trade prices hit two-year low: Trade reference prices of both both galvanised plain (GP) coils and pre-painted galvanised iron (PPGI) coils have hit a two-year low mark. SteelMint's weekly assessment for GP (0.8mm, 120gsm) has dropped to INR 62,400/t while that of PPGI (0.9mm, 90gsm) to INR 70,600/t as on 9 December 2022. Prices mentioned are on an exy-Mumbai basis, excluding GST @ 18%. Similar levels were last seen in December 2020. This comes amid a continual decline in feed material- cold rolled coil (CRC) prices- and slower demand post-Diwali holidays.

2. Export volumes down steep 74% in H1FY23: Another major set back for the coated steel market has been the levy of 15% export duty on non-alloyed flat rolled products. Export volumes in H1FY23 (April-September) aggregated to mere 0.343 mnt contrasted against 1.337 mnt in the year-ago period.

Furthermore, since the levy on 21 May 2022, export trade activites started to decline which pushed the volumes to below 20,000 t-a-month levels in the July-September quarter.

"The unrelenting geo-political and economic concerns have made energy markets extremely vulnerable and, thus, even post-export the tax getting revoked, Indian mills have not been able to secure large volume of exports, particularly to the European Union," informed reliable sources. This has added to additional inventory in the domestic market, keeping trade price levels under pressure.

3. CRC prices hit two-year low mark: Similar to the value-added GP and PPGI prices, the prices of feed material - CRCs - have also dropped to December 2020 levels this week. SteelMint's weekly assessment for CRC (IS513 Gr O, 0.9mm) stood at INR 60,300/t exy-Mumbai, excluding GST @ 18%, as on 7 December 2022. This is another factor which has pushed buyers to make cautious purchases in the market.