Posted on 18 Dec 2024
Morning Brief: Indian steel prices are nursing the blues and how. The India Composite Steel Index dropped 1.5% to 128.1 points at closure on 13 December, 2024. This is a 12-week low but importantly, these levels for the past many months are groveling at four year-lows.
The longs index fell 2.46% while the flats fared marginally better, falling 0.48%.
Factors that impacted the index last week
BF rebars fall further as challenges continue: Trade-level blast furnace-route rebar prices fell by INR 800/t ($9/t) to INR 53,000/t ($625/t). The project segment witnessed a further INR 1,000/t ($12/t) decline in prices to INR 51,000-52,000/t ($601-613/t).
Several factors contributed to this down syndrome. 1) The trend of lacklustre demand continued. Longs players are suffering in particular with the government reigning in its infrastructure push. 2) The liquidity crunch, as several state elections loom nearer from next year, are adding to the woes. Even as end-buyers feel the liquidity crunch, in a cyclical pattern, little off-take is tightening the funds availability with manufacturers. 3) Early December saw a tier-1 mill putting its caster on maintenance which led to a tightness in rebar supplies, which impacted supplies but had no effect on prices though.
IF rebar market sees mixed trends: Longs prices overall performed poorly last week. Induction furnace rebar prices remained stable w-o-w at INR 46,000/t ($542/t) ex-Mumbai, which somewhat helped to cushion the longs index, although structural fell over 6% w-o-w. The flatness in the ex-Mumbai prices can be attributed to the mid-week increase of around INR 600/t ($7/t).
However, trade-level rebar prices across India declined amid slack demand and inventory idling time remained high at 12-15 days. Overall, longs' challenges remained the same -- low demand, liquidity crunch, scant project opportunities amid smog and tightened government infra spending.
Trade-level flats decline further amid slow sales: Trade-level HRC prices across India showed a drop of INR 100-600/t ($1-6/t) to settle at INR 46,500-49,500/t ($548-584/t) amid slow sales. CRCs too dropped by a similar amount to INR 52,500-58,500/t ($619-690/t).
Benchmark HRCs and CRCs, however, dropped a nominal INR 200/t ($2/t) to INR 47,100/t ($555/t) and INR 53,800/t ($634/t) respectively.
The market remained subdued because 1) buyers opted for need-based procurements and that too on credit to avoid inventory holding costs. 2) This is putting pressure on distributors who are unable to liquidate inventory to generate cash flows. 3) There is a huge inventory pile-up amid slack sales. 4) In the end-user segment, only B2C sales were slightly active amid attractive discounts. 5) Imports continue to be a concern although volumes have declined. However, these are contributing to the domestic flats inventory pile-up.
Exports throw up mixed trend: Exports threw up a mixed trend last week, which was at least better than the moribund state they have been in for months now. India's export offers to the Middle East fell by $5/t w-o-w to $550/t CFR. Possibly, the lowered offers attracted some buyers. An HRC cargo of around 11,000 t was booked at $545-550/t CFR, $20-25/t higher than the Chinese offers.
Europe remained dull although offers were static at $590-595/t CFR Antwerp because of the ongoing anti-dumping probe from EC and longer delivery times.
Outlook
Prices may move in a narrow range in the short term amid continued slack domestic demand for longs and flats. Exports have seen a slight movement and this could sustain going forward, if some restocking continues in the Middle East.
Source:BigMint
