Weekly: Indian steel market snapshot

Indian steel prices surged during week 28 on account of increased inquiries and supply tightness of semi finished products which influenced producers to keep prices on higher side.

The market participants are assuming that prices are less likely to drop on an immediate basis due to lessened conversion spread (margins) with the standalone mills. However average finished steel demand remained a major concern which may put pressure on prices, if demand falls in coming days.

As per SteelMint assessment, this week prices of semi finished steel prices have surged by INR 100-700/t, while finished long steel prices have declined by INR 200-400/t except in central India where prices increased by INR 400-600/t. Meanwhile, the flat steel prices have increased up to INR 500/t this week.

IRON ORE & PELLETS

Odisha iron ore prices remain unchanged for the week. Odisha's state-owned miner- Odisha Mining Corporation (OMC) had received flat bids in the fines auction and only 52% got sold.

• Odisha govt. has increased the number of trips that trucks from 19 Joda mines can take to Paradip and Gopalpur ports, though capping of truck movement has been revised for mines in Koira region of the state
  
  
• SteelMint's bi-weekly domestic pellet index "PELLEX" up by INR150/t to INR 6,050/t DAP Raipur in recent deals concluded for a total quantity of 90,000t.
  
  
• Durgapur pellet offers stand at INR 5700-5800/t & Bellary at INR 5,600-5,800/t during the week. Some high-grade ore shortage information has been observed amid weak demand in the market.
  
  
• The export realization was calculated by SteelMint at around INR 6,200/t DAP Raipur based on a FOB east coast provisional assessment $101/t on 10 Jul'20 and was given a weightage of 12.5%. Though indicative offers for exports increased by $2-3/t since Monday and are currently at around $113-114/t, CFR China.
  
  

COAL

Indian buying interest for seaborne coking coal has considerably weakened with most steel plants operating at lower capacity utilisation levels and high inventory stockpiles.

Downstream demand from steel-buying sectors such as automotive, consumer durables, construction and real estate remained subdued throughout the past quarter, resulting in sluggish demand for coking coal.

• Latest offers for the Premium HCC grade are assessed at around $115.25/t FOB Australia, $128.50/t CNF China and $128.00/t CNF India.
  
  
• SECL, the largest coal-producing subsidiary of CIL, is inviting bids for the spot auction of 1,577,880 t coal, scheduled on 13 Jul'20.
  
  

FERROUS SCRAP

Indian imported scrap market witnessed improvement this week, with trades of Shredded and HMS getting reported. Offers remained mostly firm, showing a slight uptick in the latter part of the week. Buyers expecting slight price correction in the near term on slight fall in Turkish prices.

• SteelMint's assessment for shredded scrap from UK/Europe this week inched up by $2/t against closing of last week and stands at $285/t CFR Nhava Sheva. Shredded offers had ranged between $283-285/t CFR for most of the week, and firmed at $285/t by latter half.
  
  
• A major steelmaker booked 4,000t of Shredded from the UK in the beginning of the week, at $280/t CFR basis, while a couple of other bookings at around $282/t CFR were reported for Mundra and Nhava Sheva.
  
  
• HMS 1&2 (80:20) from UK is being offered in the range of $248-250/t CFR, and buyers expressed interest at close to these levels, while Brazilian HMS 1&2 (80:20) stands at around $245/t, with few bookings to Mundra port at this price level in the week.
  
  
• West African HMS 1&2 (80:20) was sold at $ 255/t CFR to Chennai based steel mills, and offered at $243-245/t CFR Goa and $238-240/t CFR Nhava Sheva.
  
  

FERRO ALLOYS

• Silico manganese prices were stable throughout the week, availability of 60-14 grade from Raipur has improved.
  
  
• Ferro manganese prices fell due to dull demand with little or no trades being concluded.
  
  
• Prices of ferro chrome fell due to dull demand in the domestic market amid rising selling pressure.
  
  
• Prices of ferro silicon fell due to limited transactions. Producers are facing higher selling pressure.
  
  

SEMI FINISHED

Indian Semis market showed improvement this week, in which domestic sponge iron offers surged by INR 200-700/t ($3-9) & Billet by INR 100-500/t ($1-7). The major sponge manufacturers in central & eastern India reported healthy orders in hand, hence not looking for any corrections in coming short term.

• Indian sponge iron export offers firm this week at around $235-240/t CPT Benapole, equivalent to $260/t CFR Chittagong, Bangladesh.
  
  
• Steel grade pig iron prices increased by INR 300-600/t w-o-w on account of supply shortage in eastern India along with rise in sponge iron prices.
  
  
• Indian mid scale mills billet export offers up by $5-7/t & few deals learned at around $355-358/t ex-mill, Durgapur, equivalent to $385-390/t CPT Nepal, via road delivery.
  
  
• An Indian mill was reported to have book 20,000 t billets (125*125 mm, 5sp) through tender at $380/t, on FoB basis.
  
  
• Vizag Steel has floated an export tender of 30,000 t blooms (150*150 mm) for Aug-end shipment. The due date of the tender is 14 Jul'20.
  
  

FINISHED LONG

Indian rebar market witnessed measured transactions and prices contracted by INR 200-500/t in most of the regions on weekly comparison.

However, central region rebar prices improved by INR 400-600/t from the last couple of days owing to tight raw material movement, thus trade participants have adjusted prices accordingly.

• Trade reference rebar prices (12-25 mm) through midsized mills assessed at INR 30,700-30,900/t Ex Raipur & INR 31,500-31,800/t Ex-Jalna.
  
  
• Raipur based heavy structure manufacturers have lowered their trade discounts to INR 300-600/t and the trade price of 200 Angle is at INR 34,600-35,000/t EXW.
  
  
• Trade discounts in Raipur wire rod are currently at INR 800-900/t and trade reference prices stood at INR 30,700-31,100/t ex-Raipur and INR 31,500-31,700/t, ex-Durgapur, size 5.5 mm.
  
  

FINISHED FLAT

Domestic HRC prices were higher by INR 250-500/t in most markets this week as major steel mills announced increases in price for July deliveries. Prices in a few markets were, however, flat from previous week's levels.

• HRC (IS 2062, 2.5 - 8 mm) prices were at INR 35,500-36,500/t (ex- Mumbai), INR 36,000-36,500/t (ex-Delhi), and INR 37,500-38,000/t (ex-Chennai).
  
  
• CRC (0.9 mm IS513 GR) prices were assessed at INR 40,000-42,000/t (ex- Mumbai), INR 41,500-42,500/t (ex- Chennai) and INR 40,200- 42,000/t (ex-Delhi).
  
  

However on the other hand, end-customers might be unwilling to buy much volume at these prices. Thus mills might have to offer discounts to customers by around INR 1,000-1,500/t as end-user sectors such as manufacturing and construction reported slow sales in the domestic market. Meanwhile persistence of coronavirus-related restrictions in several cities, including the five metros, continues to dampen economic activity and steel demand.

Reference Prices as on 11th July 2020 (Week 28)

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

Indian Export Reference Prices as on 11th Jul'20

Prices in $/t
Source: SteelMint Research