Indian Steel Market Weekly Snapshot

Indian Steel prices further declined this week (14-19th Jan'19) through the mid size mills due to weak demand from the domestic & global buyers. The participants reported improved supply, while demand continue to stagnant, this has resulted significant fall in prices

As per assessment, during the week-3, prices of Semis & Finished long steel products declined by INR 200-800/MT (USD 3-12). Meanwhile the flat steel products registered price reduction of INR 1,000-1,500/MT (USD 14-21) through the traders end.

Industry sources believed that, domestic steel prices to remain under pressure if demands not peak. In addition the key factors behind price corrections are stated - healthier supply, weak global trends and continued fall in raw materials.

Iron ore and Pellets

Odisha iron ore prices have not seen much movement this week but as per the participants fines prices may not show much variation in the near term.

Domestic Pellet Offers in India continue downtrend amid fewer trades this week. Durgapur pellet prices have declined further by INR 100/MT to INR 5,500/MT against last week's assessment of INR 5,600-5,700/MT. Raipur pellet prices haven't changed against the end of last week assessment at around INR 6,000/MT. Buyers eyeing for levels of INR 400-500/MT lower than current Raipur offers.

-- Southern India (Bellary) pellet prices decreased further this week to INR 6,800-6,900/MT against INR 6,900-7,000/MT(basic) beginning of this week's assessment.

-- West Bengal (East India) based pellet maker - Rashmi Metaliks had concluded two pellet export deals to China for 55,000MT pellets. As per sources, the deal has been concluded at USD 110/MT, CFR China for Feb laycan.

Coal

Seaborne premium hard coking coal prices have remained mostly stable so far this week following a steep drop of about USD 9.5/MT since the latter part of last week, whereas the 64 mid-vol prices have been slightly correcting upwards, after tumbling by USD 6.5/MT over the weekend.

In China, market sources predict the downward trend to continue in the near term, due to ample supply of international cargoes ahead of the forthcoming Chinese New Year festival season, during which lower steel production rates are expected.

Meanwhile, some sources view the current seaborne coking coal prices to be viable and cost-efficient compared to domestic coals, especially considering that the Chinese coal production may face disruptions given the safety checks in place at coal mines in Shandong, Henan and Northeast China.

Latest prices for the Premium HCC and 64 Mid Vol HCC grades are assessed at around USD 192/MT and USD 177.55/MT FOB Australia respectively.
For Indian buyers, the above offers amount to USD 203.70/MT and USD 189.25/MT respectively on CNF India basis.

Scrap

Indian imported scrap market observed limited trades seeking more clarity on global prices. Shredded scrap is being offered at stable levels however, HMS prices from UK/Europe and West Africa showed sliding down on W-o-W.

-- Domestic scrap prices weakened further on dull local fundamentals and finished steel demand.

-- SteelMint's assessment for containerized Shredded stands in the range USD 320-325/MT, CFR Nhava Sheva. Couple of trades reported for containerized Shredded of UK/US origin in the range USD 320-325/MT, CFR.

-- Dubai HMS 1 assessed at around USD 318-320/MT and assessment of HMS 1&2 from UK/Europe and West Africa stand USD 300-305/MT, CFR and USD 300-310/MT, CFR depending on quality.

Semi Finished

Indian Semis market reported dull trade activities as Billet prices fall further by around INR 200-700/MT and major slide seen in western India following price corrections in Scrap & poor off take in finished products.

Domestic Sponge iron marked price fall of INR 200-400/MT in across markets except in southern region where it was more or less firm amid constant demand from local market.

Meanwhile pig iron observed continuous fall and in a week down by INR 400-800/MT with major price corrections in eastern region by INR 600-800/MT on strong supply & less demand from domestic & global buyers.

-- Indian induction grade billets (100*100 mm) export offers from eastern India, Durgapur hovering at USD 430/MT ex-mill, equivalent to USD 455/MT CFR Raxaul border(Nepal).

-- Indian sponge iron export offers reduced by USD 10-15/MT W-o-W, price assessment for 80 FeM sponge lumps are at around USD 310/MT CPT Benapole (dry land port of Bangladesh & India), equivalent to USD 330/MT CFR Chittagong, Bangladesh.

-- Tata Sponge Iron Ltd (TSIL) one of the largest sponge producer in Eastern part of India has released its quarterly results on 12th Jan 2019, in which the company's net profit plunged to INR 26.80 Cr in Q3 FY19 as compared to INR 35.99 Cr in the Q3 of FY18, decline by INR 9.19 Cr (25.53%) Y-o-Y.

-- Tata Metaliks Limited (TML) recent has declared its quarterly and 9 months results ended on 31st Dec'18, in which the company's pig iron sales reported fall of 27% Q-o-Q & 28% Y-o-Y in Q3 FY19.

-- Vizag Steel concludes 15,000 MT Billet (150*150 mm, IS 2830 C20 MMn Gr A) ocean export tender at USD 414-417/MT, FoB India.

-- Central & Eastern India pig iron offer dipped to 10 month's low. The latest offers for Steel (basic) grade Pig iron in Central India - Raipur hovering at INR 28,000/MT, while in Eastern region - Durgapur & Jharkhand at around INR 27,300-27,500/MT, excluding GST.

-- Jindal Steel has reduced pig iron prices by INR 400/MT and fresh offers for steel grade at INR 27,800/MT ex-Raigarh. Bulk purchase discount being offered by INR 100-300/MT.

-- SteelMint's Pig iron export price assessment stood at USD 355-365/MT FoB India, USD 330-340/MT FoB Brazil & USD 325-335/MT FoB Black sea.

Finish Long

Market seems under selling pressure as trade volume have been registered near to average basis only and local demand doesn't framed in exact manner resulted fall in prices by around INR 600-800/MT in overall regions.

SteelMint learned from market participants that Industrialist are having mild selling pressure due to slowdown lifting and liquidity issue in specified locations & overall sentiments doesn't have strong opinions.

Further, Raipur based Heavy structure manufacturers have slightly increase discount range to INR 600-700/MT and current trade reference prices at INR 40,500-40,900/MT (200 Angle) upon booking quantity.

Current trade reference rebar prices (12-25 mm) assessed at INR 36,000-36,300/MT Ex- Jalna & INR 34,300-34,600/MT Ex- Raipur. All prices mentioned above are basic & excluding GST.

-- Few Indian large mills provides monthly discount/incentives by INR 500-700/MT depending on the quantity lifting in order to push sales, as per market participants.

-- Presently, large mills are offering 12mm rebar at around INR 40,000-40,500/MT ex-Delhi/NCR, excluding GST.

-- Wire rod trade discount offered by the manufacturers/suppliers in Raipur slightly increased compared to last week which is now at INR 900-1,300/MT.

-- As per sources, a large Mill is offering 5.5-6mm wire rod at around INR 43,700-44,000/MT ex-Chennai & excluding GST (grade SAE 1008).

Finish Flat

Domestic flat steel prices witnessed significant downtrend amid cost effective imports along with dull domestic demand. Traders reported monotonous buying and sluggish trades prevailing in domestic market.

This week domestic HRC prices decline by INR 1,000-1,500/MT, meanwhile CRC prices have also corrected by around INR 1,500/MT in traders market.

Current trade reference prices for HRC (IS2062) 2.5 mm-8 mm is around INR 41,000/MT (ex-Mumbai) and INR 41,500/MT (ex-Delhi) & for CRC (IS513) 0.9mm is hovering in the range of INR 46,500/MT(ex-Mumbai) and INR 46,000-48,000/MT (ex-Delhi). The prices mentioned above are basic prices excluding GST@18% on cash payment basis.

In addition falling raw materials like iron ore and coking coal prices are also pulling down HRC prices in domestic market.

Parity of landed cost of imports vs domestic offers - Indian steel mills booked around 20,000 MT of HRC from Korea at USD 525/MT CFR basis. As per calculations, landed cost of HRC to India from South Korea is coming around INR 39,500/MT (ex-Mumbai, GST extra @18%).

However on the other hand domestic HRC prices is hovering around INR 41,000/MT (ex-Mumbai),GST extra @ 18%. Thus imported material is cheaper by INR 1,500/MT which in turn may result to further correction in flat steel prices in domestic market.

Indian Raw material and Finished Steel reference Prices as on 19 January 2019 (Week 3)

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

Indian Export Reference Prices as on 19th January'19

Prices in USD/MT
Source: SteelMint Research