Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Indian flat steel prices have hit an all-time high, driven by high demand from the auto sector. High international prices pushed  domestic prices up. Following a jump in JSW steel’s HRC prices, Sail, JSPL and AM/NS have also announced price hikes for April shipments by Rs4,500-5,000/mt ($54-67/mt). Long steel prices were also hiked by Rs3,000-3,500/mt from last month.


Internationally, hot-rolled coil prices in Europe rose above $1,000/mt, Asian markets are around $920/mt while in China, it has surpassed $880-890/mt. The difference between average global prices and Indian HRC of up to Rs11,000/mt ($148/mt) offered room for prices in India to climb.


It is expected that Indian HRC prices could reach $1,000/mt cfr Southeast Asia very soon. Offers for Indian HRC (SAE 1006, 2mm) are heard at $920-930/mt cfr Vietnam, while most Vietnamese mills countered bids of $900-905/mt cfr Vietnam. The strong downstream demand and a tight supply from steel mills is resulting in increased competition to secure flat steel products among Asian buyers.

Vietnamese steelmaker Formosa Ha Tinh is expected to revise HRC prices soon. Indian HRC export prices above $900/mt —  equivalent to Rs65,000-66,000/mt — is still  Rs3,000-4,000/mt behind. In Mumbai, HRC offers are at Rs60,000-61,000/mt ex-works. Indian mills geared up exports amid depreciation of Rupee against US Dollar to a 20-month low. 


In India, demand growth is robust compared to last year but the resurgence of COVID-19 keeps the outlook mixed and the quantum of price hikes in the near term would be dependent on how the present price hike is absorbed. Iron ore prices in India rose with the price hike announced by NMDC. Effective April, the company increased lump ore prices by Rs500/mt to Rs5,850/mt and fines by Rs250/mt to Rs4,560/mt. 


In China, HRC prices have hit a 13-year high approaching the peak achieved during mid-2008. Since early March, domestic hot-rolled coil prices rose above 12pc. Billet prices rose to CNY5,060/mt ex-Tangshan while imported levels jumped above $655-665/mt cfr China. 


Along with demand, the jump in HRC prices was due to a rise in iron ore prices. Iron ore prices also climbed to $173/mt cfr North China levels on Wednesday, up $15/mt from a low at $158/mt cfr a month earlier following stricter emission control targets and related production curbs. Australia, one of the leading iron ore suppliers, is likely to see supply disruption due to cyclone forecast in the Pilbara region. 


The Tangshan government’s production cuts are now extended for the entire year. Most blast furnace steel mills are likely to cut production capacity by 30pc to 50pc. It is anticipated that similar output cuts will be extended beyond Tangshan in a bid to achieve the Chinese government’s target of reducing steel production in 2021.

($1=Rs74.06, CNY6.54)

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