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

In the absence of demand for finished steel in the domestic market, Indian primary mills have switched to producing and selling semi-finished in export markets. Secondary mills raised prices for billets in the domestic market by Rs1,000-1,500/mt ($14-20/mt) in two weeks, following increased exports for the past two months, mainly to China. An increase in iron ore and ferrous scrap prices was also a major contributing factor. Despite this rise in input cost, traders expect finished steel prices in Indian markets to either stay flat or fall in the near term.


Market participants are unsure of any immediate revival for finished steel in Indian markets. This, mainly since the upcoming monsoon season will slow construction activity in the real estate sector and defer the launch of new infrastructure projects. Demand is expected to return to pre-COVID-19 level by September, only after monsoons.


The highways and road transport ministry has over 400 planned projects. Over 200 projects are already in progress while 200 more are likely to commence in the coming months. The Sagarmala port project is also expected to consume a large volume of steel.


Still, prices are likely to either stay flat or fall. Primary mills which were working at 50pc capacity in April ramped up production to nearly 60-70pc in May. JSW steel, a large player known for the production of flat steel products has resumed production at 80pc level. 


Secondary mills in Central and East India have resumed production at 70-80pc levels. But those in the western region continue to face a shortage of labour and are working at 50pc levels. With very limited finished steel demand at present, inventories are likely to pile up till demand revives and pressure prices. 


Billet trades continue

Meanwhile, many large mills continue selling billets in seaborne markets. Indian sellers are receiving enquiries from China, Vietnam, Nepal, Bangladesh, Sri Lanka as well as few Middle Eastern and European countries. Out of total steel export including semis, around 70-75pc have been sold to China in the past two months.


RINL, a major state-owned steelmaker also increased its billet assortment and started commercial production of 125*125mm billets for the first time.

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