Indian HRC producers reduce list prices by up to INR 1,750/t for Jul'24 sales; some mills offer rebates for Jun

A few of the private Indian flat steel producers reduced prices of hot rolled coils (HRCs) by around INR 1,000-1,750/t ($12-21/t)with effect from 1 July 2024. The price reduction for cold rolled coils (CRCs) is around INR 1,000-1,500/t ($12-18/t) for July 2024 sales. A few mills have also extended rebates around INR 500-750/t ($6-9/t) for the June sales, BigMint learnt from a few industry sources.

The current effective prices for HRCs (2.5-8mm, IS2062, Gr E250, Br.) stand at around INR 53,000-53,500/t ($635-641/t) ex-Mumbai, and CRCs (0.9mm, IS513 CR1) hover at INR 60,000-60,500/t ($719-725/t). An announcement from the PSU major is yet to be received. The above prices exclude GST at 18%.

What propelled mills to reduce list prices for July 2024?

1. Improved material supplies in domestic market: Supplies of HRCs remained high in the domestic market amid increasing preference for cheaper import alternatives and need-based procurement. The distribution segment was sitting on ample supplies of domestically produced HRCs which were priced higher against the imported alternatives. As a result, some mills had taken maintenance shutdowns ahead of schedule which is generally during the monsoons. For instance, one of the hot strip mills (HSM) of AM/NS India is under maintenance till 20 July. The mill had commenced the same around 22 June. Some market sources informed that one HSM of JSPL's is expected to go under maintenance in the coming weeks.

Production levels of HRCs up in May: The production levels of HRCs from tier I mills have fluctuated over the first five months of calendar year (CY) 2024 as per the Joint Plant Committee (JPC) data. The production levels that had been increasing from November 2023 (4.51 mnt) till March 2024 (4.86 mnt) dropped in April to 4.232 mnt following the shutdowns opted by mills. Also, mills had been facing competition from the cheaper imports, making it a challenge to close export deals for HRCs which remained slow over this period. However, production volumes rose slightly in May 2024 to 4.366 mnt, followed by another round of shutdowns opted by private steel majors amid the lacklustre demand in both the domestic traders' and overseas markets.

Imports lead the charge: The import volumes of HRCs increased about 18% to 0.40 mnt in June 2024 over the previous month's 0.34 mnt. The highest level was seen at 0.62 mnt in January followed by 0.46 mnt in February and 0.41 mnt in April in 2024. The price differential between domestic trade-level HRCs versus the landed imported alternatives encouraged end-buyers to opt for the latter.

The current imported HRCs arriving had been booked in April and May, 2024. The landed cost of imports from countries with a free trade agreement (FTA) signed with India had been at around INR 51,100/t ($612/t), landed at Mumbai, for April, and at INR 51,500/t ($617/t) landed at Mumbai in May.

Meanwhile, those from China (non-FTA) stood at around INR 49,000/t ($587/t) in April and INR 49,500/t ($593/t), landed Mumbai in May 2024. The above-mentioned prices exclude GST at 18%

2. Lacklustre domestic trade-level demand: The domestic traders' market demand has remained need-based with volumes as per urgent requirements. This led to a slower price movement in the domestic traders' segment. The average monthly price of benchmark HRCs (2.5-8mm, IS2062, Gr E250, Br.) dropped a meagre INR 250/t ($3/t) in June 2024 to 53,800/t ($644/t) exy-Mumbai against the previous month. The monthly average price of CRCs (0.9mm, IS513 CR1), dropped by around INR 700/t ($8/t) m-o-m to INR 60,300/t ($722/t) exy-Mumbai in June 2024. The prices mentioned above exclude GST at 18%.

The mills enjoyed good bookings from buyers in their B2C segment, including automobile and white goods manufacturers and infrastructure and construction companies which lent some support.

However, the distributor network is wary of these prices and the lacklustre demand in the traders' market. "Some traders in the southern markets are looking at cheaper imported alternatives for HRCs. This is likely to reduce the share of domestically produced HRCs in their sales mix," distributor sources informed BigMint.

Near-term outlook

Prices in the traders' market are likely to remain range-bound in the near term as the announced list prices from mills are close to the former. However, the onset of monsoons will dampen demand which is already slow amid need-based buying and a stall in open-air constructions. This may weigh on the price levels in the latter half of the month.