- Production cuts keep BF-route rebars supported
- IF-route prices remain range-bound in Holi week
- Flats experience liquidity crunch, year-end blues
Morning Brief: The BigMint India steel composite index maintained a flat trend w-o-w, closing on 29 March at 137.5 points (137.8 points). The index has fallen off 140 levels since mid-January 2024, averaging 138.7 since then, a value nearest to it last seen three years back, in early January 2021.
The index has also been in negative zone since October 2023.
Factors that influenced the index last week
While longs remained slightly supported by the production cuts from mills, flats were not so lucky in a week turned sluggish by Holi, the year-end and liquidity crunch.
BF-route prices see slight uptick amid tight supply: In longs, trade-level blast furnace-(BF) route rebar prices remained mostly stable w-o-w, rising in select markets. As a result, prices rose a nominal INR 300/tonne ($4/t) to INR 52,700/t ($632/t), which slightly upped the longs index. In the project segment, prices remained inert at INR 50,000-50,500/t ($600-606/t), which did not allow the long steel index to rise beyond 0.67% w-o-w. BF-route prices have remained supported for the past few weeks because of the production cuts effected in February by the tier-1 mills. Despite being the financial year-end, there was a slight uptick in buying since it is expected that the market may slow down further in the upcoming months because of the elections.
IF rebars witness listless Holi week: Trading activities were initially dull for the induction furnace mills when the markets opened after Holi but then picked up slightly. However, prices remained range-bound at INR 49,100/t ($589/t), falling a minor INR 100/t ($1/t) w-o-w. The listless market saw sporadic deals happening but at the lower end of the spectrum even though sellers tried to increase offers.
Trade-level flats fall amid liquidity crunch: The year-end, however, took a toll on domestic hot rolled coil (HRC) prices. Buying dropped dramatically across market, forcing prices to fall by INR 2,200/t ($26/t) in Chennai, and by INR 1,000/t ($12/t) in Kolkata and Bangalore markets. Cold rolled coil prices too fell by around INR 1,000/t in Kolkata and INR 1,300/t ($16/t) in Delhi. The market saw very few deals amid tight liquidity ahead of the elections plus the year-end saw book closures.
Exports remain a damp squib: The exports segment too remained dull amid the Good Friday and Easter weekend. BigMint’s India HRC export index (for the Middle East and Vietnam) remained flat at around $575/t FOB east coast India after having dropped $15/t in the preceding week.
HRC offers to Vietnam and Middle East dropped because of subdued demand, competitive domestic and competitive pricing from China. Chinese HRC export offers receded by $10-25/t, while offers from India also edged down. Indian offers to Europe remained steady, with reduced activity levels amid the Easter holidays.
Outlook
The coming weeks may not see much of an uptick in market activities as the elections draw closer and liquidity tightness becomes stronger.
If Chinese exports sustain their momentum, this can have a downward spin-off impact on Indian export offers too.
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
