India: Trade-level HRC, CRC prices fall by up to INR 400/t amid concerns of oversupply

Prices of trade-level hot-rolled coils (HRCs) tumbled by up to INR 400/t ($5/t), while cold-rolled coils (CRCs) witnessed a marginal decline of up to INR 300/t ($4/t) for markets under assessment during the reviewed period. Weak market sentiment, fueled by subdued trading activity, import pressures, and cheaper domestic alternatives, weighed heavily on prices. However, industry whispers suggest potential price support initiatives from mills could be on the horizon.

SteelMint's bi-weekly benchmark assessment for hot-rolled coils (HRC) (IS2062, Gr E250, 2.5-8mm) witnessed a slight dip of INR 100/t ($1/t) on 20 December, 2023, settling at INR 55,000/t ($662/t) compared to the previous week. In contrast, cold-rolled coils (CRC) (IS513, Gr O, 0.9mm) prices remained stable at INR 62,500/t ($752/t) during the same period. (Exchange rates: INR 1 = USD 0.0120355 ; USD 1 = INR 83.0876)

Market updates:

1. Domestic trade-level prices under pressure amid oversupply: A confluence of factors is dampening trading activity in the market. A surge in competitively priced imports, coupled with ample domestic production at attractive prices, has led to an oversupply of readily available material. This has put severe pressure on profitability, making market participants cautious and driving downward pressure on prices throughout the distribution network.

The excess inventory is reaching even the mill level, with rumors of one mill offering discounts of INR 700-1000/t. This has sparked expectations of wider price adjustments across the market.

2. Indian HRC export prices remain range-bound: Indian mills' HRC export to the European Union (EU) declined by $10/t w-o-w to around $695/t CFR Antwerp. Export deals of around 15,000 t were concluded from India to EU, as were recorded by SteelMint.

Indian steel mills held back HRC exports to Southeast Asia and the Middle East, citing lower returns and aggressive Chinese pricing.

3. Imports rise in December: The bulk HRC and plates imports volumes reached 4,86,383 t in December 2023 (provisional), as per the vessel line-up data tracked by SteelMint. It was around 10,85,033 t in November 2023 and 5,84,999 t in October 2023.

Provisional import data for October-December 2023 indicates a significant increase in steel imports to India, with volumes reaching 21,56,415 t, representing a 200% y-o-y surge from 7,20,196 t in October-December 2022 and a 78% increase compared to 12,12,020 t in July-September 2023.

Outlook: The oversupply created in the market is going to dwindle down over the period of time. Whereas, participants opine that demand is likely to stay at the current pace. Thus, trade-level prices shall tread through smoothly with minimal fluctuations in the near term.