India: Trade market prices of coated steel products tumble to 15-month low

Trade-level prices of coated steel products have hit the lowest point in 15 months after reaching an all-time high towards the beginning of April 2022. Prices of GP (0.8mm, 120gsm) were assessed at around INR 92,500-93,500/t, while PPGI (0.5mm, 90gsm) prices were at INR 100,000-101,000/t on 8 April, as per SteelMint assessment.

This week's trade prices for GP (0.8mm, 120gsm) stood at INR 67,000-68,000/t while PPGI (0.5mm, 90gsm) prices were at 76,000-77,000/t. Prices are on an exy-Mumbai basis and exclude GST at 18%.

It may be recalled that Indian coated steel manufacturers had reduced their list prices for early-September sales to INR 66,000-68,000/t for GP, while PPGI prices were at INR 78,000-78,500/t exy-Mumbai, excluding GST at 18%.

Why coated steel prices continue to decline?

Drop in upstream product prices: The continued decline in prices of upstream products, hot-rolled (HR) and cold rolled (CR) coils, weighed on prices of value-added coated steel products. On a monthly basis, trade-level prices of HRC and CRC have been falling since April. End-user industrial buyers turned cautious with prices peaking in early April and have been procuring material on the basis of immediate requirements since then.

Impact of export duty: Trade-level prices of all finished flat steel products took a hit due to the imposition of 15% export duty on steel announced on 22 May. With the duty being imposed on non-alloyed clad or plated flat steel products, overseas trades turned slow. Limited demand in the overseas markets for alloyed or boron-added products also led to the decline in export volumes. This had an adverse impact on domestic prices.

Sluggish demand in Q2FY'23: Auto OEMs are one of the key consuming industries of coated products. SteelMint learnt from market sources that some of the leading mills and automakers came together to settle the galvannealed coil prices, where Q1 contracts closed with an increase of INR 4,600/t and Q2 closed with prices decreasing by INR 9650/t compared to H2FY'22.

Meanwhile, demand for coated steel products remains seasonally weak during monsoons (July-September). Decline in construction activities weighs on demand for roofing sheets and profiles, while pre-engineered building (PEB) manufacturers also slow a general lack of interest during the rainy season, a distributor source based in north India informed. Demand shall most likely gather momentum after the monsoon season.