Indian mills cut HRC, CRC list prices for Dec sales, rolls over rebar prices

Indian tier-1 mills have cut list prices for HRC by upto INR 3,000/t ($37) and CRC by upto INR 4,800/t ($59) for early Dec, SteelMint learned from market participants. However, rebar prices have been rolled over on relatively better demand from infra sector and the cost factor.

The list prices across mills for early Dec'22 dispatches stand at the following rates, exy-Mumbai basis, excluding GST @ 18%:

Reasons for the price cuts in flat steel:

1. Demand tepid, stockists go slow: Flat steels, unlike longs, are currently not finding much demand and price support. The post-festive demand upturn did not meet expectations. Even if demand from project and automotive segments is moderate, stockists are going slow, saddled with inventory bought at higher prices.

2. Exports are yet to resume big-time: India's steel exports in the first 10 months of CY 2022 (January-October) fell by over 40% y-o-y to around 9.3 million tonnes (mnt) from over 16 mnt in the corresponding period last year, as per SteelMint data.Exports of HRC and heavy plates that stand at around 3.08 mnt in January-October this year have plunged 45% compared with 5.7 mnt in the year-ago period. This has resulted in exerting pressure on domestic HRC and CRC prices.

3. Imports continue: Cheaper, imported HRCs are entering India and even if mills say these are not a threat, coming as they are in small parcels, pipe makers are finding these lucrative, with a price differential of around INR 7,000/t.

Some volumes have now been booked from Vietnam, after Japan. This trend is expected to continue into the short term.

4. Coking coal comparatively cheaper: Coking coal prices have also dropped to $260-300/t levels since July unlike the $400-600/t seen earlier in the year. Thus, input cost support is also weak for tier-1 mills.

Why are the rebar prices rolled over?
Indian tier 2 rebar mills have continued to remain pressure amidst higher coal and power prices. Monthly average of RB2 (5500 NAR) coal price assessment was recorded at INR 16,700/t ($204) Gangavaram in November 2022, with a marginal drop of INR 300/t ($4) m -o-m.

As the October 2022 spread between Tier 1 (BF-route) and Tier 2 (IF-route) rebar trade prices were around INR 800/t ($10), most of the end users preferred buying from primary mills. This led to a drop in monthly average IF-route rebar trade prices by nearly INR 3,000/t ($37/t) m-o-m to stand at around INR 52,700/t ($645/t) in November. It is to be noted that IF route rebar enjoys 65-70% of the market share. On the other hand, BF route rebar trade prices fell by about INR 800/t ($10/t) to INR 56,000/t ($685/t) in November against INR 56,800/t ($695/t) a month ago.

Outlook
The above factors are not likely to resolve in the short term and will continue to pressure flats, and not give mills leeway to raise prices in the rest of the quarter. However, the demand push from infra and construction is likely to keep rebar price levels supported.