Posted on 20 Feb 2025
Morning Brief: BigMint's India Steel Composite Index crept up by 0.3% w-o-w to 129.3 points on 7 February 2025, primarily due to robust gains in hot-rolled coil (HRC) prices this week. Additionally, tier 1 mills lifted HRC and rebar list prices, which supported higher offers in the trade segment.
Notably, the latest assessment placed the index at a two-month high, with similar levels last noted in the first week of December.
The flat steel index climbed up by a healthy 1% w-o-w, buoyed by a 1.4% surge in HRC prices. The HR plate index also rose by 0.7% w-o-w, mirroring the uptrend in HRC.
In contrast, the longs index edged down by 0.1% w-o-w, given a 0.2% drop in rebar prices, which was partially compensated for by marginal gains in wire rods and structural steel.
Factors impacting index
HRC tags rise as Tier-1 mills hike list prices: Benchmark HRC prices in Mumbai increased by INR 200/tonne (t) ($2/t) w-o-w to INR 48,700/t ($555/t), fuelled by the following factors:
(1) Several Teir-1 mills raised list prices of HRCs and cold-rolled coils (CRCs) by INR 1,500-2,000/t ($17-23/t) for February 2025 sales against end-January levels.
(2) Pressure of imports on the market has reduced considerably. India's bulk HRC imports plunged 35% y-o-y and 14% m-o-m to 406,255 t in January.
(3) The market expects supply to tighten, with certain mills opting for maintenance this month. This is in addition to shutdowns at JSW Vijayanagar's HSM2 and AM/NS India's Corex-2 plant.
(4) Given that the fiscal-end is approaching, market participants may be loosening their purse strings to use up their annual budgets. This may lead to higher demand this month.
Although these factors have made conditions conducive to a price hike, limited demand may keep tags under pressure. Additionally, it is questionable if market participants will be amenable to mills' higher prices.
BF rebar list prices rise, trade market follows suit: In the trade segment, rebar prices surged by INR 500/t ($6/t) w-o-w to INR 52,700/t ($600/t) exy-Mumbai ex-GST. This followed a hike by the Tier-1 mills for early-February. List prices were raised by INR 500-1,000/t ($6-11/t) to around INR 52,000-53,000/t ($594-605/t) on a landed basis.
Two factors encouraged Tier-1 mills to raise rebar prices:
(1) Induction furnace (IF) rebar prices rose m-o-m amid moderate procurement volumes. Benchmark prices were up by INR 200/t ($2/t) m-o-m to INR 47,100/t ($537/t) exw-Mumbai in January.
(2) As per sources, rebar inventories with mills declined by around 20% m-o-m in early-February.
In the projects segment, prices rose to around INR 49,500-50,500/t ($564-575/t) FOR Mumbai from INR 48,000-49,000/t ($547-558/t) a week ago.
IF rebar prices drop amid subdued trades: IF rebar prices dropped by INR 100-1,100/t ($1-13/t) w-o-w across regions, though Bangalore and Hyderabad saw tags rising by INR 100/t ($1/t) and 500/t ($6/t) w-o-w, respectively.
While need-based purchases took place earlier in the week, volumes tapered off eventually due to market uncertainties.
Consequently, prices fell, as manufacturers tried to make their offers more attractive.
Rebar inventories at IF mills fell to around 8-10 days against 10-12 days earlier amid smooth dispatches of previously booked materials.
Notably, the decline in IF rebar prices led to the 0.2% drop in the rebar index. Given that IF rebars command a 65-70% share of the market, their impact on the index is greater.
HRC export offers to ME hold firm: HRC export offers for the Middle East (ME) and Vietnam remained firm w-o-w, at $505/t FOB east coast India. This was supported by a recent export deal from India to the ME. However, exports to Europe remained nil amid subdued demand and ongoing anti-dumping investigations.
With Chinese market participants returning from the Lunar New Year holidays, there may be increased pressure on Indian offers, though demand in the ME is expected to remain steady.
Outlook
The increase in list prices and, consequently, trade-level values of HRCs and BF rebars indicates that there is some optimism in the market. Participants are also gearing up for a further uptick in the coming days. However, the uptrend may end up being contained by subdued demand, low transaction volumes, and price resistance among buyers. For the same reasons, it is uncertain whether the revised list prices will be accepted by the market.
India Steel Composite Index
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.
BigMint 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, BigMint 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.
Source:BigMint
