India steel index inches up w-o-w; billets, sponge fuel longs rise

It is three weeks now that the India Steel Composite Index has been traversing in positive territory. It closed up a marginal 0.8% at 143.80 points against the previous week's 141.80 points.

The longs index climbed into positive zone. The India Long Steel Composite Index upped 1.55% to end the week at 138 points (135.90).

The India Flat Steel Composite Index, on the other hand, remained almost flat at 148.20 (148).

Factors which influenced the index last week

Longs

Tier-1 mils raise rebar prices again:?Indian primary mills opted for an interim price hike of INR 500-750/tonne ($6-9/t) in rebar list prices with effect from 17 August 2023. It may be noted that this was the second price hike during the month.

On cue, trade-level prices of blast furnace (BF)-route rebars, excluding GST, rose across major markets by INR 400/t ($5/t) w-o-w to INR 51,200/t ($616/t), exy-Mumbai.

However, sources indicated that buying interest was still slow, which weighed on market sentiments.

As a result, projects segment rebar prices remained flat w-o-w at INR 49,000-50,000/t ($590-602/t) FOR Mumbai. Sources said that although enquiries have increased, negotiations with major real estate players are still underway.

Hike in IF-grade rebar prices:?A key reason for the tier-1 rebar price hike lies in the fact that the induction furnace (IF) segment raised its rebar prices. Since these mills command the major share of the rebar market at 65-70%, their price movements sway that of tier-1 mills too.?IF rebar prices increased w-o-w to INR 48,600/t ($585/t) exw-Mumbai from INR 47,700/t ($574/t) in the preceding week.

The price hike in the IF segment was fuelled by rise in prices of semi-finish steel (billets) and sponge iron, two key raw materials.

Domestic billet prices sharply increased by INR 400-1,900/t across regions while sponge iron prices rose INR 800-1,400/t w-o-w.

Flats

Trade-level flats prices range-bound:?Trade-level prices of flat steel continued to remain range-bound this week. The Independence Day holiday mood kept buyers away from the spot market. That apart, distributors are concerned over a market buzz that mills may opt for an interim hike in August and thus they refrained from changing their quotes despite the limited supply from mills and low stock levels in the distribution channel, especially for hot-rolled plates and coated products.

Exports scenario dull:?Furthermore, Indian mills have held back their overseas offers for Vietnam and Middle East buyers since the last six weeks. This has kept the SteelMint HRC (SAE1006) export index unchanged at $570/t FOB east coast for the eighth consecutive week now. The export price, flat for weeks, exerted a strong influence on the flats index, keeping it range-bound.

Although there were inquiries from the Middle East, mills did not quote because of the higher realisations in the domestic market.

Indications for HRC offers to Europe were heard at around $685-690/t CFR. However, no bookings were heard concluded.

Outlook:

IF-grade rebar prices, after having taken two consecutive w-o-w hikes, are likely to remain range-bound in the near term, feel sources.

In flats, a few mills and distributors are anticipating demand to pick up in the next couple of weeks.

However, global HRC market sentiments may be mixed in the near term as Chinese export offers declined but domestic prices in China, Vietnam and India witnessed an increase in August.

The India Steel Composite Index is assessed on a weekly basis,?every Friday at 18:30 IST, as per the weighted average prices based on manufacturing capacity and production.

SteelMint?considers the Composite Index with the base year being 3 January 2020 (financial year 2019-2020) and the base value as 100. The Composite Index does not give the absolute price but a trend of the market. The Indian steel industry is broadly classified into the BF-BOF and the electric/induction furnace routes. Keeping this broad classification in view, SteelMint proposes to release the Composite Index by considering both production routes by manufacturing capacity and the production weighted method to compute the index for India.