India: Trade-level HRC and CRC prices remain range-bound as imports continue to exert pressure

Trade-level prices for hot-rolled (HR) and cold-rolled (CR) coils remained unchanged in most of the markets under assessment this week. This stagnation reflects a market sentiment anticipating further price declines due to an oversupply of material. Consequently, trading activities continue to remain lack lusture, with many participants adopting a wait-and-see approach.

SteelMint's latest bi-weekly assessment has remained unchanged in the benchmark price of hot-rolled coils (HRC) in India. The price of HRC (IS2062, Gr E250, 2.5-8mm) remained unchanged at INR 55,100/t ($656/t) maintaining the range of INR 55,000-56,000/t ($655-667), compared to last week's levels. Also, the price of cold-rolled coils (CRC) (IS513, Gr O, 0.9mm) remained stable during the same period, holding at INR 62,500/t ($744/t). The prices mentioned above are on an exy-Mumbai basis, and exclude GST at 18%. (INR 1 = USD 0.011911 ; USD 1 = INR 83.3955)

Market updates:

1) Domestic trade-level prices under pressure from oversupply: The traders' market has very limited activity. Furthermore, the domestic traders' market has sufficient supply from imports. Also, material from the recently started NMDC Nagarnagar plant has begun to make inroads in the market further increasing the pressure on prices. The inventory with mills is also increasing. This has fuelled expectation of further softening of prices. As a result, participants are being cautious and undertaking need-based procurements.

"The availability of competitively priced imported HRCs has increased the supply. For every single unit of demand there is supply of 3 units increasing the pressure on the prices," informed a distributor.

2) Indian mills keep quotes unchanged for HRC to EU: Indian mills have kept hot-rolled coil (HRC) export offers stable at around $700-705/t CFR Antwerp for the European Union (EU). Indian mills are only offering to EU as realisations are better and producers in EU are seeking higher prices for February 2024 deliveries in the domestic market.

Indian mills have also chosen to hold HRC export offers for Southeast Asia and the Middle East (ME) markets as realisations are lower and Chinese prices are competitive.

3) Imports begin to fall in December: The bulk HRC and plates imports volumes reached 2,35,730 t in December 2023 (provisional), as per the vessel line-up data tracked by SteelMint. It was around 1.08 mnt in November 2023 and 5,84,999 t October 2023. A market participant opined that import volumes are expected to reduce by mid-January 2024 and no new bookings were heard in the last fortnight.

4) Divergent Signals: Indian Steel Consumption Growth & PMI Show Contrasting Trends: Indian steel consumption, measured by Apparent Steel Usage (ASU), increased by 5.4% in November 2023 to 11.42 million tonnes from 10.83 mnt in October 2023. However, the Purchasing Managers' Index (PMI) for the services sector fell to 56.9 in November 2023 from 58.4 in the previous month, the lowest level this year, indicating a slowdown in economic activity.

This divergence between the two indicators highlights conflicting signals about the state of the Indian economy. The coming months will be crucial to understand how these trends evolve and ultimately impact the overall economic outlook.

Outlook

It is expected that the import volumes will decrease by mid-January 2024. Demand and consumption are expected to increase after mid-January 2024. Till then the prices are expected to be more or less stable.