Steelmint: India Steel Composite Index edges down on weak flat steel indices

SteelMint's India Steel Composite Index declined by 0.8% to 192.9 this week. The index declined due to the weak performances of the flat steel indices. However, the fall was somewhat mitigated by improved activities in the long steel segment.

The index is backed by robust calculation methods and is derived from the long steel and flat steel composite indices. It serves as a benchmark for end-users, EPC contractors, and manufacturers in the iron and steel industry for settling contracts or understand the market cost of physical supply of commodities such as rebar, wire rods, structurals, HRCs, CRCs, plates and galvanised plates.

• • The Composite Index is assessed on a weekly basis: every Friday at 18:30 IST, as per the weighted average prices based on manufacturing capacity and production.
    
    
  • SteelMint considers the Composite Index with the base year being 3 Jan'20 (financial year 2019-2020) and the base value as 100.
    
    
  • The Composite Index doesn't give the absolute price.
    
    
  • The Indian steel industry is broadly classified into the BF-BOF and the electric/induction furnace routes. Keeping this broad classification in view, SteelMint proposes to release the Composite Index by considering both production routes by manufacturing capacity and the production weighted method to compute the index for India. For details click to view the methodology document.
    
    
  
  
  

The flat steel index stood at 201.5, dipping 2.1% from the previous week's 205.9 mark. Slow trade momentum in both the domestic and overseas markets weighed on trade market prices across product categories.

The increase in offer levels from distributors and traders until the previous week amid steep rise in the list prices of steel majors for Apr delivery weighed on buying sentiments. SteelMint's benchmark assessment for HRC (IS 2062, 2.5-8mm) stood at around INR 68,000-69,000/t ($891-905/t) exy Mumbai at the beginning of Mar and it climbed to a high of $78,500-79,500/t ($1,029-1,042/t) exy Mumbai in the first week of Apr. The prices mentioned are exclusive of GST @ 18%. Already slow demand from the end-user industries weakened further this week, forcing distributors and traders to reduce their offer levels to incite buying interest.

Furthermore, the buying sentiments were hit by declining offer levels of major mills in the export markets. For instance, a mill booked some 8,000-10,000 t HRC (SAE1006) at $1,000/t CFR UAE, down from $1,050-1,110/t CFR earlier this week. Similary, another mill booked 20,000 t HRC (S275) at $1,150/t CFR Italy, south Europe. However, the offers as per SteelMint's assessment, stood at around $1,200-1,250/t CFR Antwerp, north Europe, earlier this week, which dropped by $35/t to $1,190/t CFR towards the weekend. The deals mentioned above are for end-May or early-June delivery.

The long steel index showed some improvement this week, edging up by 0.6% to 184.7 as against 183.7 last week. Buyers who had held back purchases since mid-Mar came out to procure material this week and billet and sponge iron prices started to edge higher this week. High power costs in some regions also pushed prices upward for induction furnace (IF) route long steel products. On the contrary, in the case of blast funace (BF) steel products, buying interest remained reportedly slow because of higher prices and sizeable procurements seen in the past few weeks.