Indian Steel Market Weekly Snapshot

Indian steel market remained quite uncertain for the week 8 (19-24 February, 2018) as the prices remained volatile on average demand amid short supply of Semis materials like Pig iron.

SteelMint's assessment shows, volatility in prices by INR 200-800/MT (USD 3-13) in Semis & long steel products. Meanwhile, the Flat steel prices remained unaltered following average demand in domestic market.

Iron ore and Pellets: In the Odisha illegal mining case, Supreme Court in its hearing on on 23rd Feb'18 has allowed state's 2nd largest merchant miner - Serajuddin Mines to resume operations, as per sources. In second major development, Essel Mining of Odisha has resumed sales from its Koira mines which may ease out the supply in the state. Followed this miners kept the prices unchanged this week also.

Domestic pellet prices in India reported mixed sentiments this week. While eastern and central India markets reported price corrections, southern and western India reported price increase. Central India based market participant's shared limited buying interest in pellets and decreased by INR 150/MT (ex-works, GST extra). Pellet trades have remained subdued in eastern India and prices continue to remain under pressure. Southern India pellet prices increased marginally by around INR 100/MT this week.

Scrap: In last one month's time, Indian steel mills booked around 4-5 bulk vessels for March shipments and fetched good volumes of scrap. Last week a bulk vessel of 32,000 MT was booked containing mix grades of scrap comprising 10,000 MT HMS 1&2 (80:20) at USD 378/MT, 15,000 MT Shredded at USD 383/MT and P&S at USD 388/MT, CFR Kandla respectively. As per sources, the vessel was booked by a consortium of Gujarat based steel plants.

However offers for Shredded scrap in containers is assessed around USD 390-395/MT, CFR India and offers for HMS from Dubai around USD 370-375/MT.

Coking Coal: Coking Coal prices continued the upward movements with the sellers in Australia lifting the spot prices in order to capitalize upon the strengthening demand. At the same time, there was a disruption in the railway coal transport infrastructure due to heavy rain--catalyzing the price rise.

Spot prices of the Premium HCC have gone up to around USD 232.25/MT FoB Australia. The prices are expected to go up further as the Chinese steel makers will be importing heavily as they will operate their plants at high rates.

Indian Semi finished market volatile in week-8 over subdued demand and supply crunch in Pig iron. In the week sponge prices fluctuated by INR 200-400/MT (USD 3-6) & Billet by 100-500/MT (USD 1-8). However due to short supply of pig iron, offers rise by INR 1,500-2,500/MT (USD 23-39). Few weekly trade wise:-

-- Indian sponge iron (DRI) export offers increase this week by USD 10/MT and are assessed for 80 FeM sponge lumps at around USD 390/MT CPT Benapole (land port of Bangladesh and India). On CFR basis, the offers are hovering at USD 410/MT, CFR Chittagong, Bangladesh.

-- Rashtriya Ispat Nigam Limited has issued a tender for export of 10,000 MT billet, 20,000 MT Blooms, 10,000 MT Rounds and 3,000 MT Angles. The due date for bid submission is 23 Feb'18.

-- Tata Metaliks, India's one of the major foundry grade pig iron manufacturer has raised its prices by INR 300/MT (USD 5) in current week. The total price rise during Feb'18 are reported at INR 1,100/MT. The latest offers are reported at INR 31,600/MT (USD 488) for high silicon, foundry grade pig iron.

-- Jindal Steel has increased Pig iron prices by INR 1,000/MT (USD 15) against offers during last week. The latest offers are reported for Granulated Pig iron (panther shots) at INR 28,500/MT & Pooled iron at INR 27,500/MT ex-plant, Odisha.

-- Steel grade pig iron producers in Central region increased prices by INR 1,500/MT W-o-W & in Eastern India prices increased upto INR 2,500/MT due to shortage on close sales by couple of major merchant pig iron suppliers.

Finish-Long Steel: As per week assessment, finish long demand sustain in the domestic market and the prices fluctuates by INR 300-700/MT in major markets.

As per Industry participants, Rebar prices won't drifted down with major marks as demand moderate also new housing projects has been announced by state government like Telangana and in near future such projects likely to be announce by other state government.

Further, finish long prices are expected to get some uncreative directions on short term due to coming festive mood, the sources predicted.

Central Region - Raipur based Wire Rod manufacturers have elongated discount range by INR 200-300/MT to INR 1,300-1,500/MT and decreased gauge parity by INR 200/MT to INR 1,900/MT which was earlier at INR 2,100/MT between HB Wire (12 Gauge) to Wire Rod (5.5 mm) in an existing week.

In a mid week, medium steel plants in Ghaziabad have increased heavy structure (Beams & Channels) gauge parity by INR 300/MT in almost all sizes and generally get changed as per central region movements.

Flat Steel Market : Indian flat steel prices have remained stable this week in domestic market since last couple of weeks after witnessing increase of INR 1,500/MT (USD 23/MT) in the start of Feb'18 amid tight supply and improved demand in domestic market.

However supply constraint still remains the issue for major Indian manufactures in domestic market.Thus demand supply mismatch is pushing Indian steel manufacturer to raise the Indian flat steel prices further by INR 1000-1500/MT in Mar'18.

Another reason which can be attributed for hike in domestic flat steel prices is landed cost of HRC imports to India is costlier by around INR 1,000-2,500/MT from exporting nations like China,Japan and South Korea. Thus imports will not be viable from these countries to India. However, domestic flat steel prices are still trading at a discount compared to imported prices.

Currently trade reference prices (basic) for HRC (IS2062) 2.5 mm-8 mm are assessed at INR 44,000/MT (ex-Mumbai), INR 44,500/MT (ex-Delhi),INR 44,500MT (ex-Chennai). The prices mentioned above are basic prices excluding GST @ 18%. Trade reference prices (basic) for CRC (IS513) 0.9mm is hovering in the range of INR 48,000-48,500/MT (ex-Mumbai) INR 48,500-49,000/MT (ex-Delhi) and INR 48,000-48,500/MT (ex-Chennai).The prices mentioned above are basic prices excluding GST@18%

However few trade sources reported higher domestic prices has lead to slow buying in domestic market. Thus the situation still remains uncertain whether the further hike in flat steel prices shall be absorbed in the domestic market or not.

Indian Raw material and Finished Steel reference Prices as on 24 Feb 2018 (Week 08)

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

Indian Export Reference Prices as on 24th Feb'18

Prices in USD/MT
Source: SteelMint Research