India: Trade-level HRC-plates and CRC prices stay weak; Mills raise tags by up to INR 1,000/t ($12/) for early Jan'24

The trade-level prices of hot-rolled coils (HRC) and Plates have edged down against the previous week's levels. Cold-rolled coil prices, on the other hand, stood range-bound. The market is buzzing with the news of the list price increase of INR 500/t ($6/t), for January 2024 sales; along with a complete withdrawal of price support offered in December 2023 by the state-owned mill. Whereas, the private steel majors too have announced an increase in their list price tags of around INR 1,000/t ($12/t) for the current month. However, the price tags have remained elusive and shall be covered in a separate write-up after the due diligence.

SteelMint's benchmark assessment (bi-weekly) for HRC (IS2062, Gr-E250, 2.5-8mm) edged down by INR 400/t ($5/t) to INR 54,000-55,000/t ($649-661/t) with the average around INR 54,600/t as on 2 January 2024. However, those for CRC (IS513 Gr-O, 0.9mm) stood unchanged at INR 61,500-63,000/t ($739-757/t) averaging at INR 62,200/t ($748/t). These have remained range-bound as per the second weekly assessment as of 5 January.

These prices are on an exy-Mumbai basis, excluding GST at 18%, and are for cut-to-length (CTL) deliveries. (INR 1 = USD 0.0120213 ; USD 1 = INR 83.1855)

Meanwhile, the weekly assessed hot-rolled plates (IS2062, Gr E250, 20-40mm) prices dropped by INR 1,400/t ($17/t) to hover at around INR 62,000/t ($745/t) in the wider range of INR 57,500-67,000 ($691-805/t), breaking the three week's streak of staying range-bound. Decently filled order books of private mills with exports and Business-to-Customer (B2C) sales orders have given them leverage and helped maintain a higher price level. Moreover, steel inventories of private mills are less compared with those of the public sector unit, according to distributor sources from the Western regions. These prices are on an exy-Mumbai basis and exclude GST at 18%.

Market updates:

Raw material prices; cost pressure issues: Mills' action to raise prices is also based upon the price increase of basic raw materials- iron ore and coking coal in December 2023 against the previous month. The prices rose at a noble pace despite the volatility. The monthly average price of Odisha iron ore index (0-10mm Fines, Fe 62%) stood at INR 5,220/t ($63/t) ex-Mines by the end of December 2023, up by INR 308/t ($5/t) against the previous month's closure. On similar lines, offers for the imported, Australian Origin premium hard coking coal (HCC) also rose by $6/t m-o-m to $344/t CNF Paradip, India towards the end of December.

Mills resume export activities: Indian mills have closed a few export deals for both HRC and CRC in the overseas market in the last 15-20 days. Talking about the European Union (EU) region, export activities had picked up in the first fortnight of December itself. The icing on the cake is, the deals recently closed in the Middle East (ME) region. A private mill was successful in closing decent volumes of HRC for export at $635-640/t CFR, UAE for late January to early February 2024. With this, SteelMint's India HRC (SAE1006) export index resumed and was computed at $600/t FOB as of 02 January 2024. The previous assessment was performed on 19 September 2023, with the offer at $580/t FOB.

Mills shall likely try for more export deals as the demand is improving in the ME market, hinted EXIM sources. However, mills have maintained their silence and not quoting any offers in the Southeast Asian markets, especially Vietnam.

Prices close to the bottom, anticipation of demand revival: The prices are close to or reached the bottom The decline in manufacturing indices goes in support of this; opined a few distributor sources. For instance, the Manufacturing Purchasing Managers' Index (PMI) slowed down by 1.1 points to 54.9 points in December 2023, compared with November's 56.0 points, as per data released by IHS Markit. However, there are indications that flat steel prices shall stabilize from hereon and might start moving upwards later in the month, as per a few other sources.

The air of elections that dawned upon the prices in November and December months is being seen as an avenue for demand revival towards the end of January 2024. The ongoing infrastructure and civil construction projects might pick up speed to complete the same in regions where elections are yet to be announced.

Moreover, government projects are being completed at an improved pace under the banners of Atmanirbhar Bhart, Amrit Stations, and the National Infrastructure Pipeline (NIP); also, promoting the government's vision of 'Make in India'. For instance, the pace of additions to the national highways in April-November FY 2024 was an impressive 29 kilometers per day (km/d) compared with the previous fiscal's 26 km/d. Moreover, during the said period 5,248 km were added this fiscal year against the previous year's 4,766 km.