Indian Steel Market Weekly Snapshot

Indian Steel prices were down trend during the Week -40 (1st-6th Oct'18) over limited spot trades amid robust supply. However by the end of week, the prices have started to gain momentum with better demand from the domestic mills.

The market participants feel that, Indian steel prices to find support as input cost remained higher due to high cost import of raw materials with the direct impact of depreciating Indian rupee against US dollar. Following the high input cost amid anticipations of seasonal demand, the large mills have also raised Finished steel prices for October deliveries by INR 500-1,500/MT (USD 7-21).

Iron Ore: Odisha's state-owned miner- Odisha Mining Corporation (OMC) had concluded an e-auction on 03rd Oct'18. The auction had fetched flat bids. Out of the total quantity 445,000 MT iron ore lumps were offered, around 52% (233,000 MT) of material got booked.

Central India (Raipur) pellet offers have decreased further from the end of last week. Current assessment for Fe 63% pellets is at INR 8,600-8,700/MT (basic, Raipur) against INR 8,800-8,900/MT (basic) at the end of last week. Buying interest is still weak. Current Ex-Durgapur pellet price assessment at INR 8,100-8,200/MT against INR 7,900-8,000/MT (delivered) at the beginning of this week.

As per the reports, an Odisha (Jharsuguda) based pellet maker had sold 5,000MT Pellets towards the end of last week at around INR 8,450/MT landed to Raipur which has kept Raipur pellet offers under pressure.

Scrap: Indian ferrous scrap importers have turned silent with an impact of recent currency depreciation of INR against USD. Buying sentiments among importers weakened amid less supportive semi finish and finish steel prices. Fall in local scrap prices and its cheaper availability over imported has resulted pressurizing UAE HMS scrap prices this week.

Offers for UK and Europe origin containerized Shredded scrap heard stable in the range of USD 355-363/MT, CFR Nhava Sheva. While UAE HMS 1 offers heard in the range of USD 340-350/MT, CFR. Minor trades for West African HMS 1&2 in containers learned at around USD 335-340/MT, CFR India.

Australian coking coal prices surged at the start of this week after Peabody Energy Corp. confirmed that its North Goonyella metallurgical coal mine in Queensland was unlikely to produce any materials in the fourth quarter of this year following the breakout of a fire.

Moreover, persistent vessel queues at Dalrymple Bay, Australia's largest export met coal terminal, and upcoming planned maintenance works at Hay Point would aggravate the market's tight supply situation. Furthermore, Australia's rainy season is set to begin in December, possibly threatening further supply disruptions.

Additionally, the Chinese government's pollution-control measures are expected to underpin prices for the steelmaking raw material in the final quarter of this year, especially in the premium segment, with steel makers favoring materials with low volatile matter, ash and sulfur.

The latest price for the Premium HCC grade is assessed at around USD 213/MT FOB Australia, up by about USD 8.50/MT from a week ago (24-30 Sep'18).

Semi finished steel: In a week duration, domestic Sponge iron & Billet offers slump by INR 300-1,400/MT(USD 11-21). In this period major fall in Billet seen in Mumbai & Chennai by INR 1,300/MT on limited inquiries.

Manufacturers in Durgapur (West Bengal) & in Raigarh (Chhattisgarh) are not operating mills at optimum utilization as power cut remained by DVC (Damodar Valley Corporation) in Durgapur & Jindal Power Ltd (JPL) in Raigarh.

-- Indian induction grade billet export offers to Nepal hovering at USD 450-455/MT ex-mill, Durgapur, Eastern India. The prices declined about USD 25/MT, W-o-W as against last week offers.

-- Indian sponge iron export offers fall by USD 20-25/MT W-o-W, price assessment for 78-80 FeM sponge lumps are at USD 330-335/MT CPT Benapole (dry land port of Bangladesh & India) and USD 350-355/MT CFR Chittagong, Bangladesh.

-- Vizag steel has received good response to its 10,836 MT (90*90mm) billet export tender for Nepal which was floated on 29th Sep'18 and the highest bid for the Billet export tender reported at around USD 500-505/MT and the tender have settled at same bids (ex-Mill), as per sources. While in recent SAIL has floated a export tender for Prime Mild Steel Non-Alloy Concast Billets of 13,500 MT (125*125mm) from Durgapur Steel plant. The due date for submission of bids is 10 Oct'18.

-- Jindal Steel has reduced prices by INR 200/MT over limited deals and the latest offers reported for Panther shots (Granulated Pig iron) at INR 29,000/MT & Pooled iron at INR 27,500/MT, ex-plant, Angul (ex-Odisha).

-- MMTC on behalf of NINL had floated an export tender of 30,000 MT non-alloy Pig Iron whose due date for bid submission was on 26 Sept'18. The tender fetched participation from 2-3 companies and has been concluded at the levels of around USD 388-390/MT, FoB India.

-- Indian private pig iron producers cut prices by INR 500-1,000/MT (W-o-W) over limited demand. The latest price assessment for Steel grade Pig iron stood at INR 29,000-29,500/MT ex-Durgapur/Jharkhand (eastern India), INR 30,800-31,000/MT ex-Raipur/Raigarh (Central India), INR 30,500-31,000/MT ex-Vizag (South India), INR 31,000/MT ex-works (West India) & INR 32,400-32,600/MT FoR Ludhiana (North India), excluding 18% GST.

-- SteelMint's Pig iron export price assessment stood at USD 365-367/MT FOB Brazil, USD 365-370/MT FOB Black Sea & USD 388-390/MT FOB India.

Indian Finish Long steel market observed measured demand on weekly basis however the momentum rebounds from last couple of days amid positive sentiments except south region where heavy rainfall have negatively affected supply chain over subdued demand.

On weekly basis, Finished steel prices fall by around INR 1,000-1,200/MT commodity wise and as per market participant's liquidity issue has been considered due to limited movement in counter sales.

Further in west region (Maharashtra) got new aspect to consider and things were assumed that load factor subsidy reduced to 50% i:e; it was reduced to 3.5% from 7%. So, overall burden stood around Rs. 0.50-0.60/unit but it's been notified that load factor subsidy reduced to 0% after getting routine bill day before yesterday and actual burden would be near about one rupee, as per steel industries.

Current trade reference prices for rebar (12-25 mm) stood at INR 38,800-39,000/MT Ex- Jalna, INR 37,400-37,800/MT Ex- Raipur, INR 41,300-41,600/MT Ex-Chennai. All prices are basic & excluding GST.

-- Indian large Steel Mills (SAIL, RINL, JSW Steel) have announced to increase its long steel prices by about INR 500-1,500/MT in the beginning of Oct'18 owing to rise in input cost and minimum inventory position. Furthermore, INR depreciation against USD (1 USD= 74 INR ) has made import costlier of raw materials.

After price hike, the rebar prices by the large scale producers stood at INR 44,300-44,800/MT ex-Chennai, INR 45,000-44,500/MT in Delhi/NCR. Size - 12 mm & excluding GST.

-- JSPL's crude steel output stood at 1.3 MnT during Jul-Sep'18; surged by 46% Y-o-Y as against 0.89 MnT Jul-Sep'17. Similarly, company's domestic sales has shown significant growth of 53% to 1.27 MnT during Jul-Sep'18 as compared to previous fiscal year at 0.83 MnT Jul-Sep'17.

-- As per sources, JSW Steel's wire rod unit based in Vijayanagar was shut down for the last one week owing to annual maintenance and the mills likely to be operational in coming one or two days.

Finish Flat Steel: This week domestic HRC prices in traders market witness steep hike and recorded all time high post price hike announcement by major Indian steel mills during early this week by INR 1,200-1,500/MT (USD 16-20). Last week traders in domestic market have already raised HRC & CRC prices by INR 500-1,000/MT on anticipated price hike by major Indian mills for Oct'18 deliveries.

The current trade reference prices for HRC (IS2062) 2.5 mm-8 mm is around INR 47,500/MT (ex-Mumbai) & INR 47,500/MT (ex-Delhi). The prices for CRC (IS513) 0.9mm is hovering in the range of INR 53,500/MT (ex-Mumbai) & INR 53,200 - 54,500/MT (ex-Delhi); prices are excluding GST, ex-works and on advance payment terms.

The mills had raised prices on account of higher input cost due to costlier raw materials imports on currency depreciation and expected improvement in auto sector demand in upcoming festive season. Indian Rupee has hit record low of 74.11 against USD.

As per conversation with market participants the levels have touched nearly to all time high. For instance HRC prices in Delhi was at INR 38,000/MT in Jun'11 (excluding excise Duty at 12.5% which was levied then). Current prices are around INR 47,500/MT (basic prices, GST at 18% extra).

Indian Raw material and Finished Steel reference Prices as on 6 October 2018 (Week 40)

Prices are Ex-works, Exclusive of GST at 18%

Indian Export Reference Prices as on 6th October'18

Prices in USD/MT
Source: SteelMint Research