India: Supply disruptions from mills keep trade-level HRC-CRC prices rangebound w-o-w

Trade-level prices of hot rolled coils (HRC) and coils rolled coils (CRC) continued to remain range-bound this week. Distributors did start quoting higher amid the demand-supply mismatch. But limited inflow of inventories and need-based procurement from buyers in the spot market kept prices from fluctuating.

SteelMint's benchmark assessment for HRCs (IS 2062, Gr E250, 2.5-8mm) was at INR 55,000-56,000/t ($668-680/t) as on 11 July 2023. That of CRCs (IS 513, Gr O, 0.9mm) was at INR 58,500-59,500/t ($710-722/t). Prices mentioned are on an exy-Mumbai basis and exclude GST at 18%. (INR 1 = USD 0.0121372 ; USD 1 = INR 82.3911)

Factors impacting current market scenario:

1. Indian mills take maintenace downtime: Indian steel majors are undertaking maintenance shutdowns while demand is still soft in the traders market. This is likely to keep supplies tight in the traders' market in the near term.

A major private mill experienced some issues with its 'reheating furnace' around 9 July and thus had to put the same under maintenance. The maintenance tenure is expected to last 4-5 days with the furnace coming back online by 13 July.

Meanwhile, another private mill's maintenance shutdown of its cold rolling mill CRM (7 days) and galvanizing line (25 days) has started from 4 July 2023. Furthermore, the hot strip mill's (HSM's) 8-day maintenance is likely to start by 19 July, sources informed SteelMint.

However, the sources declined to quantify the impact of these maintenance downtimes on output.

2. Indian HRC export offers stay firm: The other factor giving support to domestic market sentiment is the stability in export offers. Indian mills have maintained their offers over the past couple of weeks. SteelMint's India HRC (SAE1006) export index stood unchanged at $570/t FOB east coast as on 11 July.

Indian mills are not showing any signs of reducing offers as of now despite the softening witnessed in quotes from other countries. Moreover, demand is still slow in the Middle East market for Indian cargoes, amid availability of other cheaper alternatives.

Demand in the European markets is slow as well amid the current summer season. However, Indian mills are looking forward to an improvement in the same and quoting higher. Indian-origin HRCs were heard offered at around $670-675/t CFR Antwerp, up by $5-10/t w-o-w.

3. HRC export volumes drop in July: Indian HRC export cargoes have shown a steeper drop in July. The country's bulk HRC export volumes dropped 60.8% m-o-m to 0.21 mnt in July, as per provisional figures from the vessel line-up data maintained with SteelMint.

There were fewer bookings for June shipments from the European and the Middle East markets. This scenario emerged amid the declining prices of HRCs during April and May when bookings for July shipments were being done.

This led to a diversion of supplies to the domestic traders' market, where the price drops were slower in June.

Near-term outlook

Trade-level prices of HRCs-CRCs are likely to remain range-bound in the near term. Supply constraints and the hand-to-mouth buying pattern of buyers is likely to keep prices from showing any major variation. Moreover, there were no new deals heard in HRC imports, which is likely keep the market sentiment buoyant.