India: Trade-level HRC-CRC prices drop further by INR 600/t w-o-w amid lacklustre demand

Trade-level prices of hot-rolled coils (HRCs) and cold-rolled coils (CRCs) continued to decline further. These fell w-o-w by INR 600/tonne (t) in the key market of Mumbai. Lacklustre buying interest in the traders' market, falling global prices, and cheaper import options are the major concerns weighing on the sentiment and prices this week, highlighted sources.

SteelMint's benchmark bi-weekly assessment for HRCs (IS2062, Gr E250, 2.5-8mm) stood at INR 56,000-56,500/t ($677-683/t) exy-Mumbai on 30 May. Prices have dropped by INR 600/t ($7/t) w-o-w and by the same quantum against the previous assessment on 26 May.

CRC (IS513 Gr O, 0.9mm) prices also dropped by INR 600/t ($7/t) w-o-w to INR 61,000-62,000/t ($738-750/t) exy-Mumbai against price levels seen in the preceding week. Prices mentioned exclude GST at 18%. (INR 1 = USD 0.0120943 ; USD 1 = INR 82.6836)

Factors impacting trade segment prices

1. Falling global HRC prices: Indian HRC export offers are feeling the pressure of the declining prices in other exporting countries. The weekly assessed-SteelMint India HRC (SAE1006) export index dropped by $16/t w-o-w to $570/t FOB east coast as on 30 May.

Buyers in Europe and the UAE are scouting for cheaper alternatives on the global trade platform amid a downtrend in the HRC offers. Meanwhile, an Indian mill was heard to have booked around 10,000-15,000 t of HRCs for exports at $600-610/t CFR UAE. The delivery is expected in July. Also, Chinese HRCs (SAE1006) were heard being offered at around $600/t CFR UAE (down $5/t, w-o-w).

Buyers in the European Union have also turned active. They too are scouting actively for cheaper imports and waiting for Indian mills to reduce their offers further. Indian HRC (S275) export offers too have dropped by $5/t this week to $670-680/t CFR Antwerp, Europe.

2. Cheaper imports a major concern: The continual decline in prices over the past month has turned the tide for HRC imports in India. Imports for 20,000 t and 10,000 t of HRCs were heard booked with Vietnam recently. These deals were concluded at around $590-595/t CFR India for delivery in July 2023.

The landed cost of HRC imports as per the deal price would compute to around INR 50,700/t ($approx. $613/t) exy-Mumbai. Similarly, the same from the other country with Free Trade Agreement (FTA)- Japan would compute to around INR 51,100/t (approx. $618/t) exy-Mumbai. Thus, imported HRCs are now cheaper by about INR 5,000-5,500/t ($60-67/t) as compared with the Indian domestic prices.

Moreover, Chinese mills withdrew offers for the Indian market about two-three weeks back amid the volatility in the futures market. The last heard offer for Chinese HRCs were around $620/t CFR India. However, the Chinese HRC (SS400) export offers stood at $530/t FOB Rizhao, down $15/t w-o-w.

Thus, an increase in the inflow of cheaper imported HRCs is weighing on the trade-level prices.

Imports of HRCs were recorded at 148,602 t (provisional) in May 2023, as per the bulk vessel line-up data maintained with SteelMint. In January-May 2023 the import volume aggregated to 13.44 million tonnes (mnt), up by 52.6% against 8.81 mnt in the year-ago period.

3. Sluggish end-user demand in traders' market: Demand in the traders' market has dropped further as buyers are anticipating further softening in the prices of HRCs and CRCs. "There are very few active buyers in the market as compared with the sellers. The scenario has been the same since last month which has led to a decline in prices," said a major distributor from the West. Buyers have been procuring on an urgent need basis amid falling prices, he added.

Moreover, market participants are now awaiting the price announcements from major flat steel producers for June sales.

Near-term outlook

Trade-level prices are likely to remain under pressure amid lacklustre demand, and cheaper imports. Furthermore, buyers are expecting mills to cut list prices of flat steel products for June sales.