Billet

Indian mill reduces HRC and CRC list prices by up to INR 2,500/t ($31/t) for May'23

Tier-I steel producer- JSW Steel has reduced its list prices for hot-rolled coils (HRC) by INR 2,000/tonne (t) ($24/t) m-o-m for early May 2023 sales. While those of cold-rolled coils (CRC) were cut by INR 2,500/t ($31/t) m-o-m. Other major mills are likely to follow suit.

Weakening prices and demand in domestic and overseas markets were among the key reasons. Raw material prices have also declined amid recessionary concerns and elevated price levels.

Factors impacting the pricing decision for May sales:

1) Import turn viable: The weakening of global HRC prices has made imports a feasible choice for Indian buyers towards end-April. A few import deals from Japan at $700/t CFR India and from Vietnam at $665/t CFR were heard booked in April for May or early June shipments.

The landed cost of HRC imports from countries with Free Trade Agreement (FTA) on a monthly average basis dropped from INR 62,200/t ($756/t) exy-Mumbai in March to INR 60,900/t ($743/t) exy-Mumbai in April. As per current import negotiations, the same is getting computed at around INR 56,000/t (approx. $683/t) exy-Mumbai.

HRC/plate import volumes were around 194,455 t in April, down from 279,019 t in March. A lion's share of imports has come from South Korea (118,938 t), followed by Japan (37,721 t) in April. China accounted for 25,352 t with the balance coming from Vietnam, as per the bulk shipment data maintained with SteelMint.

2) Export volumes drop in Apr'23: Exports of HRC/plates from India have dropped to 401,067 t in April as compared with 467,067 t in March, as per the bulk shipment data maintained with SteelMint. Furthermore, in Jan-Feb CY'23, the volume aggregated to 1.57 million tonnes (mnt), down by 34% against 2.38 mnt in the year-ago period.

The availability of cheaper alternatives in the Middle East (ME), recessionary concerns in the European Union (EU), and pending deliveries of previous bookings in Nepal led to a decline in trade activities in these regions. Vietnam, one of the key export markets for Indian manufacturers had reduced its domestic HRC prices for May and early-June sales last month. Also, Vietnam is now offering HRC for exports to India considering a slow in home market demand.

Furthermore, China's HRC (SS400) export offers, on a monthly average basis have dropped by around $40/t m-o-m in April.

3. Need-based buying in traders' market in April: India's domestic traders' market prices weighed under the cautious buying approach of end-industrial buyers in April. "Buyers had been scouting for materials at cheaper levels compared with the mills' list prices in April. This along with the increasing viability of imports weighed on the traders' market prices during the month," said a Western India-based major distributor.

Buyers from Mirco, Small and Medium Enterprises (MSMEs) continued to make cautious procurement and avoided buying in bulk to reduce any losses anticipating a decline in prices, informed another distributor source.

Moreover, India's manufacturing PMI continued growing at a slower pace of 57.2 in April as compared with 56.4 in March and 55.3 in February. Export orders during these months played a major role in elevating the index however, the domestic trade market grappled with the lackluster demand.

On a monthly average basis, SteelMint benchmark assessment for HRC (IS2062, Gr E250, 2.5-8mm) dropped to 59,900/t ($732/t) exy-Mumbai in April as against INR 60,300/t ($737/t) exy-Mumbai a month ago. This has further dropped to INR 59,000/t ($721/t) exy-Mumbai per the last assessment on 2 May'23.

Similarly, the monthly average CRC (IS513, Gr-O, 0.9mm) price dropped to INR 64,200/t ($785/t) exy-Mumbai in April compared with INR 64,800/t ($792/t) exy-Mumbai in the preceding month. The prices on 2 May'23 were assessed further low at INR 63,200/t ($773/t) exy-Mumbai. The prices mentioned above are exclusive of GST at 18%. (INR 1 = USD 0.0122279 ; USD 1 = INR 81.7804)