India: Trade-level HRC, CRC prices fall by up to INR 600/t w-o-w

Trade-level hot-rolled (HR) and cold-rolled (CR) coil prices have edged down by around INR 400-600/t ($5-7/t) in the key markets of Mumbai and Faridabad. The influx of imports has put pressure on the domestic trade prices and has increased the supply of material. The arrival of festival holidays has slowed down the trade activities.

SteelMint's benchmark assessment (bi-weekly) for HRC (IS2062, Gr E250, 2.5-8mm) edged down by INR 500/t ($6/t) to INR 57,900/t ($696/t) as against last week's levels. Similarly, CRC (IS513, Gr O, 0.9mm) prices remained unchanged at INR 63,500/t ($763/t) in this period. (INR 1 = USD 0.0120165 ; USD 1 = INR 83.2187)

Market updates:

1. Ample supplies as Indian mills hold back export offers: Indian mills have been holding back export offers to Southeast Asia and the Middle East for over a month, and are focusing on the supplying to the domestic market. The last assessment for SteelMint's India HRC (SAE1006) export index was around $580/t FOB east coast on 19 September, since then there have been offers. In addition, competitive offers from China to the Middle East amid holidays and lower domestic offers in the EU have further kept Indian HRC suppliers on sidelines. Thus, considering the drop in export volumes, these are getting routed to the domestic market for consumption increasing the availability amid a slow demand scenario.

Furthermore, better domestic trade price levels pushed major mills to increase their list price tags of HRC-CRC for October 2023 sales. The price increases inside the national boundary until the first week of October affirmed the optimism of the mills about better in-home price levels ahead of the major festival, Diwali. However, the scenario changed by the second week when domestic trade market prices started ticking down.

Indian mills are also holding back HRC export offers to Europe amid a low demand for imported HRC is low considering the longer delivery lead time and competitiveness against offers from the European mills. The EU market also has sufficient stocks and restocking is not expected to start before November, as demand from end-users remains weak, shared a few EXIM sources.

2. Domestic traders' market cautious about imports: The steel industry participants who were denying imports as a concern for the domestic market prices have started turning cautious about the same. The bulk HRC import volumes that had peaked to 496,910 t in August 2023, had dropped to 235,240 t in September easing off that burden. However, in October import volumes (provisional) have already touched 275,630 t in the first 16 days, as per the vessel line up data maintained with SteelMint. Some import shipments from Vietnam have been heard to have preponed and are expected to land in October month itself as their BIS certificates are to expire in November, informed a few distribution network sources.

"The recent hike in the prices by mills had motivated people to import the materials. In my opinion we have seen the peak in HRC prices for now. There can be further softening of prices in the near term amid ample supplies in the market," shared a major distributor from the south.

3. Participants benefitted from the imports in August and September: A few participants have benefitted from imports in the past couple of months, enjoying a decent margin amid the uptrend in domestic market prices, a source said. The monthly average of landed cost of imported HRC from countries with Free Trade Agreement (FTA) over June till September 2023 have hovered in the range of INR 54,000-55,000/t, whereas the domestic trade level prices have risen from INR 55,400/t in June to INR 57,900/t in September. The prices mentioned above are on an exy-Mumbai basis, excluding GST at 18%.

However, currently participants are cautious amid the festive mood further slowing down the demand in the market and the softening of prices since the beginning of the previous week. The rumors of interim price hike by mills have gone silent. Furthermore, the declaration of state election in many states shall slow down the progress in the government projects in the infrastructure and other sectors, he added.

Outlook:

The trade-level prices are likely to continue to drop though at a slow pace in the near term. Ample supplies, limited demand and the concerns around imports to land in October shall weigh on the sentiments in the traders' market.