India: HRC prices unchanged amid festive holidays; market awaits November price announcements

Trade-level prices of hot-rolled coils (HRCs) and cold-rolled coils (CRCs) remained unchanged owing to lacklustre market activity across the country during the Diwali festive week. Also, major mills are likely to announce their list prices for November sales in the coming week.

Meanwhile, a few markets like Ahmedabad and Ludhiana remained closed due to the Gujarati New year and Govardhan Puja holidays, while there were very few participants in other markets, informed sources.

SteelMint's benchmark assessment for HRC (IS2062, 2.5-8mm) stood rangebound at INR 56,000-57,000/t ($680-692), while those of CRC were around INR 64,500-65,500/t ($784-796). Prices mentioned above are exy-Mumbai, excluding GST at 18%.

Market drivers:

1. Lacklustre market amid Diwali celebrations: Market activities continued to remain lacklustre with very few participants resuming operations post the Diwali festive holidays. "Following the Diwali festive holidays, other occasions like Govardhan Puja and Bhai Dooj have kept the market participation very low. This has kept trades mostly muted across the country," shared some major distributors.

2. Mills focus on domestic market amid low overseas buying interest: Domestic steel manufacturers are seeing low buying interest in the overseas markets, especially Vietnam and the Middle East (ME), retaining their focus on supplying to the domestic market. Boron chemistry, and higher concerns over inflation along with lower bids and increased competition from other exporting countries have rendered Indian origin HRCs unviable on the global platform. Very few deals have been closed in the past few months.

Chinese mills along with others like Japan and South Korea are offering HRCs at competitive prices to Vietnam and other importing markets. Chinese HRC (SAE1006) offers were heard at around $555-580/t CFR Vietnam depending upon the tier level of mills. Meanwhile, offers from Japanese mills were at around $560/t CFR Vietnam. Furthermore, the buying idea or bid levels are heard at $580/t CFR from the United Arab Emirates (UAE) market.

Last heard Indian mill indication were around $610-620/t CFR Vietnam and $620-630/t CFR UAE. This has kept SteelMint's India HRC (SAE1006) export index unchanged w-o-w at $573/t FOB east coast, as per the recent assessment on 26 October.

3. Mills wade off rising inventory concerns with lower production: Slower exports in the past few months had increased concerns over inventory pile-up with mills and also in the domestic market. Thus, mills resorted to phased maintenance shutdowns or lower capacity utilisation over the past couple of months. Q-o-q production volumes of finished flat steel products dropped for the last two consecutive quarters to 12.80 mnt (down, 7.7%) in Q2CY'22 and 12.16 (down, 5.0%) in Q3CY'22. This has helped relieve some pressure from the mills. However, mills' output is likely to increase as they start utilising the facilities coming out of the maintenance shutdowns.

For instance, JSW Steel in its recently conducted investors call highlighted that the company's crude steel production (including volumes from BPSL) dropped 1% q-o-q to 5.57 mnt in Q2 as against 5.62 mnt in the last quarter. Reduced capacity utilisation due to maintenance shutdowns during the quarter and concerns around the availability of raw materials weighed on production volumes.

4. Price clarity to emerge in coming week: Most of the market participants including those in the distribution channel and end-buyers are now waiting for mills to announce prices for November sales. "Steel mills will announce their list prices for November in the coming week. Thus, trade level market activities shall continue to remain low even as participants resume operations post the festive holidays," informed market sources.