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

Indian steel mills have hiked offers for flat steel by Rs2,000-3,000/mt from September. Flat steel producers have shifted focus to the domestic markets for September shipments as demand has returned in some recovery in the auto sector. Primary steelmakers including Tata Steel, JSW Steel and AMNS steel working at 100pc capacity and their daily productions has reached pre-COVID-19 levels. Demand for flat steel has increased following a recovery in auto production and is expected to maintain an uptrend with the festive season approaching.


HRC prices on an uptrend 

Hot-rolled coil (HRC) reportedly traded at Rs40,500-41,000/mt ($552-559/mt) ex-works Mumbai. Suspended production and limited supply due to the lockdown pushed Indian steelmakers to up their prices in early September. In the retail market, the prices for HRC in the western region are in the range of Rs42,000-42,500/mt ($574-581/mt) ex-warehouse, excluding 18pc GST, sources told Davis Index. 


Focus on domestic 

Indian flat steel producers have shifted focus to the domestic markets for September shipments as demand surged. However, a few suppliers expressed apprehensions about whether the demand from the auto sector will hold fort after Diwali. Mill might return to exporting HRC around mid-October, said traders.


In July-August, Indian steel mills aggressively received HRC export order for September shipments mostly from Vietnam, China, and the Middle East. Amid previous orders on hand, deliveries for HRC could also be delayed by 15 days.


Federation of Punjab Small Industries (FOPSIA) and Federation of Industrial and Commercial Organisation (FICO) have strongly opposed the price hike, alleging that it is an artificial hike in steel prices. These steel-consuming industrial associations have demanded that the government set up a committee to regulate steel pricing and rational the prices for the domestic market. 


HRC buyers in India’s downstream industries have hardly booked any volume in the second quarter of 2020 amid nationwide lockdown. Towards mid-July, these industries resumed operations and started restocking materials. The appetite for domestic HRC will remain strong for at least for a month, anticipate steelmakers. Many mills have slowed accepting export orders despite HRC export offers spiking up to $540-550/mt cfr China and SE Asia or equivalent to $515-520/mt fob India. 


The Indian government has also announced limits on export rebates under the Merchandise Exports from India Scheme (MEIS) for shipments valued at or below Rs20mn ($0.27mn) invoiced between Sep 1 to Dec 31. Steel exporters could have to bear nearly Rs600/mt ($8/mt) loss due to the non-availability export benefits during this period.


Scheduled maintenance 

Tata Steel BSL and AMNS steel have also announced scheduled maintenances at their plants. This is likely to result in a production shortfall. Tata Steel’s blast furnace at Angul plant is expected to remain under a weeklong maintenance shutdown reducing production by around 50,000-60,000mt. 

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