Weekly round up - Domestic steel prices trend higher amidst rising raw material prices

The domestic steel market continued to remain upbeat during week 10 (28 Feb - 5 Mar'22). Semi-finished steel prices increased in the range of INR 4,000-7,800/tonne (t). Domestic induction furnace-route finished long steel offers surged by INR 5,000-10,800/t w-o-w.

The trade reference prices for finished flat steel increased significantly by up to INR 2,500/t for HRCs and CRCs.

Iron ore

• SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 13,300/tonne (t) DAP Raipur on 3 Mar'22, up around INR 300/t against the last assessment on 1 March. The index rebounded to a four-month high in a recent deal. Around 25,000 t of pellet deals have been reported in this publishing window.
  
  
• SteelMint's weekly index for India's low-grade iron ore fines (Fe 57%) exports stood at $42/t FOB east coast, lower by $7/t w-o-w. The hike in freight rates has pulled down FOB prices from India. Vessel freight rates for supramax vessels have risen from $19/DMT seen last week to $26-27/DMT this week, according to market sources.
  
  
• SteelMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $155.5/t, up by $2.5/t w-o-w. Chinese buying interest has not remained aggressive. However, buying inquiries from the EU have increased significantly post-ongoing trade tensions.
  
  

Coal

• Australian premium low-volatile hard coking coal prices surged $102/t this week. The outbreak of Russia-Ukraine war and absence of Russian material led to increased demand for alternate Australian coal.
  
  
• Latest prices for the premium HCC grade are assessed at around $560/t FOB Australia and $585/t CNF India.
  
  
• Most sellers held their portside RB2 (5500 NAR) offers to assess the situation amid escalated thermal coal prices. Small quantities were heard to be traded at INR 20,000/t levels.
  
  
• South African RB1 prices for Mar'22 surged by $200/t w-o-w to $430/t, FOB basis amidst the Russia and Ukraine war. RB2 was sold at a premium of $20-40/t over the index price.
  
  

Ferrous scrap

India's imported scrap market continued to remain active this week, despite witnessing a price rally tracking global movement on the back of supply concerns from CIS nations. Global ferrous scrap offers hit an all-time high after a recently concluded Turkish deal. SteelMint's assessment of US-origin HMS 1 & 2 (80:20) prices was at $585-590/t CFR Turkey, hitting a multi-year high.

Recent offers and deals:

• Fresh offers for Dubai-origin HMS 1&2 (80:20) in containers are at $550/t CFR Nhava Sheva, witnessing a hike of around $40-50/t w-o-w. However, deal details remained unconfirmed.
  
  
• HMS1 from the same origin was quoted at $560/t CFR levels.
  
  
• Earlier this week, 1,000 t of HMS-1 deals in containers from the UAE were heard at $540/t CFR Nhava Sheva and around 500 t were booked at $535/t CFR Mundra basis.
  
  
• Shredded offers in containers were heard at around $595-600/t, CFR Nhava Sheva, moving up significantly, but no confirmed deal was heard.
  
  

Increasing domestic scrap prices made imports favourable, especially for HMS cargoes, SteelMint understands. HMS (80:20) prices moved up by INR 3,700/t w-o-w to INR 44,000/t ($577/t) DAP Mumbai. On the other hand, the landed costs of imported Dubai-origin HMS 1&2 (80:20) stood at INR 44,000-44,400/t.

Ferro alloys

Indian ferro alloys market saw a bullish trend this week with prices of all alloys (manganese alloys, ferro chrome, and ferro silicon) rising significantly due to global tensions.

• Silico manganese prices skyrocketed by around INR 29,000/t w-o-w amid rising inquiries from the export markets due to the Russia-Ukraine war. According to SteelMint's assessment on 04 Mar'22, Raipur producers were offering at INR 124,200/t exw while Durgapur offers were at around INR 120,000/t exw. Exporters were offering at $1,550/t for 60-14 grade and $1,725/t for 65-16 grade on FOB India basis.
  
  
• Ferro manganese (HC70%) prices jumped w-o-w in line with rising silico manganese prices. Producers were offering at around INR 115,000/t exw from both Durgapur and Raipur, as assessed on 04 Mar'22.
  
  
• Ferro chrome prices (HC60%) prices surged owing to the supply-demand mismatch. Some producers shifted to manganese alloys production which created supply shortage in the market. Indian ferro chrome prices hovered at around INR 112,000-115,000/t exw-Jajpur.
  
  
• Russia's invasion of Ukraine impacted Indian ferro silicon prices. Many European and Japanese inquiries shifted to India. Market prices for 70% grade were at around INR 160,000-165,000/t exw-Bhutan while Guwahati's offers were at around INR 170,000/t exw-basis.
  
  

Semi finished

Indian semi finished steel prices increase sharply, as per SteelMint assessment. Billet offers rose in the range of INR 5,000-7,800/t across regions with a major rise of INR 7,700-7,800/t reported in Raipur, Mandi and Mumbai region. Similarly, sponge iron prices also increased by INR 4,000-6,500/t on a weekly basis. Buyers were active in booking the material even as prices were trending all-time high.

• Tata Metaliks increased pig iron prices by INR 3,200/t ($42/t). Fresh offers for foundry grade material stood at INR 57,700/t and basic grade at INR 55,200/t exw-Kharagpur, applicable for the Kolkata and Howrah markets.
  
  
• SAIL held an auction for 2,000 t of steel grade pig iron on 4 Mar'22 from Durgapur Steel Plant (DSP). The entire quantity was booked at a weighted average price of INR 53,900/t exw.
  
  
• A Bokaro, Jharkhand-based private mill conducted an auction for 2,000 t of steel grade pig iron on 3 Mar'22 which was concluded at around INR 53,850-900/t ex-plant.
  
  
• Deals for five rakes of sponge iron were recently reported to Nepal in the range of $515-535/t (loaded on to rake), equivalent to $540-560/t CPT Nepal, (70% lumps and 30% fines, FeM 80%).
  
  
• IF-route billets export offers rose to around $740/t exw-Durgapur, equivalent to $765/t CPT Nepal. Deals were reported for a couple of rakes in the beginning of the week at around $695-700/t on exw Durgapur basis.
  
  
• Indian spot steel grade pig iron prices increased this week by INR 6,500-8,500/t on account of a surge in global coal, coke and steel prices. In addition, a slight supply shortage in eastern region was one of the major factors behind strengthening prices in few specific markets.
  
  

Finished longs

India's induction furnace-route finished long steel manufacturers kept prices higher this week too. Rebar manufacturers in most markets saw active buying enquiries and trades in the spot market. Adequate future booking orders and shortage of sizes and grades were still the major reason behind the consistent price hike. On a weekly basis, prices in rebar steel sharply rose by INR 5,000-10,800/t w-o-w, SteelMint assessment shows.

• The trade reference price of Fe 500 grade IF-rebar for 10-25 mm size was assessed at INR 62,800-63,200/t exw-Raipur and INR 70,000-70,500/t exw-Jalna.
  
  
• Trade discounts given by Raipur-based heavy structural steel manufacturers were at around INR 500-700/t. Trade reference price of 200 mm angles stood at INR 64,900-65,300/t exw-Raipur.
  
  
• Trade discounts given by Raipur-based wire rod suppliers hovered around INR 1,000/t. Trade reference prices stood at INR 62,200-62,500/t exw-Raipur and INR 60,800-61,000/t exw-Durgapur for size 5.5 mm.
  
  

Finished flats

The trade reference prices of the products in flat steel portfolio increased significantly this week in most of the markets as steel mills announced price hikes for early March sales.
Steel majors in both PSU and private segments pushed flat steel prices up by INR 2,500 for HRC and CRC, and by INR 3,000/t for plates.

Major factors behind the price hikes:

• Exports of HRCs to the European countries fetched higher realisations. Current HRC export offers to Europe are heard at $1,100/t CFR contrasted against the export deal sealed at $965-967/t CFR prior to the Russia-Ukraine geo-political tension.
  
  
• Disruption in export trades from Russia, Ukraine and few other countries in the Black Sea region may open new overseas opportunities for Indian mills.
  
  
• Increasing cost push was also among the prime factors for the price hike. On a quarterly basis, the average prices of premium hard coking coal (Premium HCC, Australian-origin) gradually rose up to $378/t CNF Paradip in Q4 CY'21 from the levels of $121/t CNF in the year ago period. Moreover, prices, as assessed on 4. Mar'22 hit a new high of $531/t CNF, rising up from $501/t CNF a day ago.
  
  

Marking the slowest growth in the past 10 months, India's Industrial Production (IIP) index fell to 0.4% in Dec'21 contrasted against 1.3% a month ago. However, industry participants saw a turn-around in demand from down stream industries such as automobile and white goods as the chip supplies improved further. For instance, the vehicle production volumes of Indian automobile giants went up by a significant 16% in Jan'22 to 18.61 lakh units against the 16 lakh units produced in Nov-Dec'21.

Furthermore, industry participants opine that Indian mills will capitalise the new opportunties for exports of flat steel products which is likely to push domestic prices upwards in the short-to-medium term. Also, most Indian mills are decently booked HRC exports until mid-April.