Govt. owned – Steel Authority of India Ltd (SAIL) conducted an auction for around 1,000 t (0-3 & 3-10mm) silico manganese on 27 Feb ’21 from its Chandrapur Ferro Alloy Plant, Maharashtra. Nearly 50% of the offered quantity was booked. 0-3mm sized material was booked at INR 47,660/t and 3-10mmat INR 60,360/t exw. In the previous auction on 17 Feb ’21, out of 1,000 t put for auction only 400 t of 3-10mm sized material was booked at INR 55,650/t.
Primary mills, which produce steel through the blast furnace route & contribute about 60% of India’s steel production are soon to declare finished long steel offers for March deliveries. These prices are expected to be hiked, SteelMint learned from its market sources.
The prices are expected to rally by about INR 1,000-1,500/t ($14-21), especially in rebars through the primary mills and the key factors behind this are mentioned below:
Healthy Finished steel export orders – Amidst moderate domestic demand, since the second half of Jan’21, the mills turned towards exports & have good orders for rebars. As per our analysis, around 170,000 t rebars deals have been concluded during Feb’21, for which deliveries are to be made in March-April this year.
Rising scrap & billets prices globally is another major factor as mills have also bagged good volumes of export orders for billets, specially by SAIL, JSPL & RINL.
Price rally by mid-size mills – With significant hike in prices by the Induction grade rebar producers, the price gap has narrowed down to around INR 4,000/t. This seems to influence primary mills to keep prices strong for the coming month. Rebar prices have been increased by INR 2,000-3,000/t by the mid-sized mills, however by primary mills it fell in the same proportion in Feb’21. This has resulted in closing the price gap between the primary & mid-sized mills rebar prices.
SteelMint’s domestic steel scrap index has risen by INR 400/t today and is assessed at INR 34,300/t DAP Mandi Gobindgarh basis. Few trades have been recorded at higher prices amid limited supply constraints. In addition to it, imported scrap prices in India have also risen by around $30/t w-o-w on global cues.
Today, 12 sets of trades, indicative prices/bids/offers were recorded in the publishing window.
The Index also derives the HMS 80:20 scrap (Heavy, Med), and CR Sheet cutting prices traded in the region.
Scrap Grade and Spread Calculation: (Mandi Gobindgarh)
Prices in INR/t, DAP (Delivered at Plant)
To see SteelMint’s Melting Scrap Assessment, pricing methodology and specification documents, Click here
What is SteelMint Indian scrap index – SteelMint’s assessment of Mandi scrap reflects the prices of different melting HMS grade generated and traded in the domestic market. SteelMint gathers and verifies information from buyers and sellers active in the physical spot market. The data obtained by SteelMint, are normalized for yield, dimensions, density, location and other terms of trade to the specifications.
Why this index? India’s National Steel Recycling policy mentioned that the efficient use of scrap for steel production becomes very crucial for India as 35-40% share has been envisaged from scrap-based steel production in the journey of 300 mn t pa by 2030. This shall increase the requirement of steel scrap sharply from the present level of around 30 mn t.
Methodology – Market data, including deals, bids, and offers that meet the delivery and quality criteria are considered for price assessments. The highest importance in the price calculation process is assigned to confirmed deals (T1) where either a buyer or seller has provided details of the transaction. Deals of only reputed and trustworthy producers and trading firms are included in the price collection and calculation process. Indicative prices, confirmed bids and offers are also considered valuable for the pricing process (T2). The index has been calculated using an average of T1 and T2 price inputs.
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- Odisha’s Serajuddin mines slashed iron ore fines offer by INR 300/t
- Bids in SAIL’s Barsua iron ore fines auction fell against early Feb
- Bids for DR grade lumps in NMDC CG iron ore auction rose by INR 820/t
- Bids in NMDC Karnataka auction remains largely unchanged
SteelMint’s weekly index for Odisha iron ore fines (Fe 62%) assessed INR 5,200/t (ex-mines, including Royalty, DMF & NMET), stable w-o-w. Confirmed trades of 154,000t fines were recorded by SteelMint in this week.
Odisha-based Serajuddin & Co. reduced iron ore fines offer by INR 300/t this week.The current offer price for Fe 63% fines is heard at around INR 5,200/t ex-mines. However, offers for 5-18 mm lump have remained unchanged.
Steel Authority of India Ltd (SAIL) conducted an auction from its Barsua mines in Odisha on 23rd Feb. 104,000 t iron ore fines (Fe 60.8%) were put up for auction. Entire material put to auction received bids at INR 2,100-2,110/t (loaded into rakes and excluding royalty), SteelMint learned from sources. Bid prices have come down by INR 770/t against its previous auction held on 03 Feb’21.
In another confirmed trade, a miner has booked around 50,000t iron ore fines (Fe 63%) from its Odisha mines this week at INR 5,200/t (ex-mines, including royalty, DMF & NMET). Hence, both the deals of SAIL & Serajuddin were taken under consideration as T1 Trade and given 50% weightage in this index.
SteelMint has also received six (6) offers, indicative prices under T2 trade in this publishing window out of those five (5) were taken into consideration and given 50% weightage. To see SteelMint’s iron ore assessments, pricing methodology and specification documents,Click here.
Odisha iron ore prices
Bids remain largely stable in SAIL’s iron ore auction from Chhattisgarh: Steel Authority of India Ltd (SAIL) conducted an auction from its Rajhara mines (Chhattisgarh) on 26 Feb’21, for 84,000 iron ore fines (Fe 58.1-60.37%). Out of the total quantity offered only 28,000 t (Fe 60.37%) received bids at INR 3,350/t (loaded into rakes and including royalty). Bids have remained largely stable against its previous auction conducted towards early Feb’21.
DR-CLO receives active response in NMDC’s CG iron ore auction – NMDC conducted iron ore e-auctions on 25th Feb for 701,400t iron ore from its Chhattisgarh mines. Offered quantity comprised of 600,600 t of fines, 50,400 t DR CLO and rest comprised of lump and ROM. The DR-CLO lots received a good response and bids increased by around INR 820/t over the set base price, as it is still cost-effective than other substitutes. However, ROM lots fetched flat bids and that of lump moved up slightly by INR 80/t, SteelMint gathered from sources.
Bids remain stable in NMDC’s Karnataka iron ore e-auction – NMDC Kumarswamy mines recently conducted an iron ore e-auction on 23rd Feb’21. Out of the total 260,000 t put to auction 231,000 t iron ore was booked. JSW Steel bought 160,000 t iron ore in the auction followed by BMM Ispat Limited at 16,000 t. The iron ore lumps (Fe 62.02% ) was booked at INR 4,831/t as against INR 4,831-4,841/t in last e-auction conducted on 9th Feb’21.
Indian secondary steel market has observed active demand & a price rally during the week in finished long products.
As per SteelMint’s price assessment, domestic sponge iron and billet offers increased by INR 200-1,800/t across India with a major increase seen in Western India. Also, the rebar market has witnessed an upward trend this week and the prices have moved up by INR 400-1,300/t w-o-w basis in most of the major supplying locations.
In context to finished flats, domestic HRC prices have seen a slight improvement by INR 250/t as compared to last week. However, mills have actively booked quantities for export on bullish global market sentiments.
Iron Ore and Pellet
- SAIL conducted an auction from its Rajhara mines (Chhattisgarh) on 26 Feb ‘21, for 84,000 iron ore fines (Fe 58.1-60.37%). Out of the total quantity offered only 28,000 t (Fe 60.37%) received bids at INR 3,350/t (loaded into rakes and including royalty).
- NMDC conducted iron ore e-auctions on 25th Feb ‘21 for 701,400 t iron ore from its Chhattisgarh mines. Offered quantity comprised of 600,600 t of fines, 50,400 t DR CLO and rest comprised of lump and ROM. The DR-CLO lots received a good response and bids increased by around INR 820/t over the set base price, as it is still cost-effective than other substitutes. However, ROM lots fetched flat bids and that of lump moved up slightly by INR 80/t.
- KIOCL has floated a tender for iron ore fines purchase from indigenous sources. The tender due date is 6th Mar’21 with a quantity in multiples of 25,000 t. KIOCL had floated two tenders for pellet sales in the domestic and export market with due date for both the tenders being 25th Feb’21. Offered quantity for each tender is about 50,000 t pellet (Fe 63%). The tender has been postponed till early next week.
- ArcelorMittal Nippon Steel India is planning to increase their pellet production capacity to 20 mn t pa by the end of Mar’21.
- SteelMint’s bi-weekly domestic pellet index “PELLEX” has increased by INR 100/t to INR 11,700/t, DAP Raipur in recent trades.
- SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index is currently assessed at $98/t FoB east coast India, up by $6 w-o-w. SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has decreased by $4/t w-o-w to $180/t.
Australian premium low-volatile (PLV) hard coking coal (HCC) price fell sharply this week following ArcelorMittal’s sell tender concluded at $126/t FOB Australia for 75,000 t of March-loading Goonyella. At present there is relatively better demand for April laycan cargoes, although demand for March-loading cargoes has thinned out in consideration of the recent unclear price movement.
Short-term market outlook remains bearish on limited buying interest, as buyers became cautious and retreated to the sidelines amid volatility in the ex-Chinese markets. Australian coking coal prices are largely anticipated to remain at lower levels until the Chinese import ban on Australian coals is lifted.
- Latest offers for the Premium HCC grade are assessed at around $125.75/t FOB Australia, $222.50/t CNF China and $145.85/t CNF India.
Imported scrap prices in India too surged significantly on the back of hike in global scrap prices. However, Indian mills remained slow, since past one month, in booking fresh slots for March shipments. Most of the buyers are purchasing local scrap as it’s cheaper than imported scrap.
Indian scrap prices are still behind as compared to a global market. Market insiders believe that prices are likely to go up further by $10-20 and buyers may come back next week. Few deals for 500-700 t of shredded have been booked at a $465-475/t CFR basis, activities have slightly picked up this week.
- SteelMint’s assessment for containerised shredded of UK/US origin stands at $470/t CFR Nhava Sheva level, increasing sharply by $25-30/t w-o-w.
- HMS 1&2 (80:20) from UK/EU is being quoted around $420-425/t CFR level, whereas same from UAE origin now stands at $410-412/t levels.
- HMS 1 from UAE is being offered at $420-425/t CFR level
- Silico Manganese prices increased due to high demand and lower inventory of silico manganese with steel producers. There is supply shrinkage in the domestic market as most producers are either catering to government orders or exports in line with better international prices.
- Ferro Manganese prices increased amidst bullish export market sentiments. Meanwhile, there is only a handful of ferro manganese producers active in the domestic market. Current offers are at around INR 70,000-71,000/t (HC 70%) on exw basis.
- Indian ferro chrome prices increased by INR 1,500/t to INR 99,000/t as most sellers are holding back offers before the Chinese ferro chrome purchase tender prices are released.
- Prices are stable for ferro silicon at INR 98,000/t and producers are optimistic as prices remain firm on increased export inquiries.
On a weekly basis, domestic sponge iron offers rise by INR 200-1,300/t in major locations. Similarly, billet prices inclined by INR 500-1,800/t across India with a major increase seen in Western India.
- SAIL conducted pig iron auction for 1,100 basic grade on 25 Feb ’21 from Durgapur Steel Plant & the entire quantity booked at INR 34,300 /t exw.
- SAIL conducted an auction on 25 Feb ’21 for 4,800 t (steel grade) pig iron from its Rourkela Steel Plant, Odisha. Buyers booked the entire quantity at a weighted average price of INR 34,900/t exw.
- Vizag Steel has floated four ocean export tenders for billets (20,000 t/95*95mm, 10,000 t/65*65mm), blooms (60,000 t/150*150mm, 3SP/4SP). The due date for bloom tender is 02 Mar ’21, while for billet tender is 03 Mar ’21.
- Vedanta Limited has increased its foundry grade pig iron offer by INR 1,500/t to INR 40,000/t FoR Ahmedabad, effective from 21 Feb’21.
- TATA Metaliks Ltd has raised its basic grade (Si 1-1.5%) pig iron price by INR 3,000/t to INR 36,700/t ($507) exw Kharagpur, eastern India and concluded a tender for a rake of foundry grade pig iron at around INR 41,600/t FoR Punjab on 22nd Feb ’21.
- Induction grade billet export offers stood at around $515/t exw Durgapur (equivalent to $540/t CPT Nepal). However few parcels have been sold at approx $510-512/t exw, equivalent to $530-535/t CPT Nepal.
- Indian sponge iron export offers increased up to $10/t to $385-390/t CPT Benapole (equivalent to $405-410/t CFR Chittagong, Bangladesh), however, no major deals due to a significant price rally, as per exporters.
- Steel grade pig iron prices increased by INR 500-1,500/t, w-o-w, on active demand amidst strengthening billet & scrap prices globally. The major hike of around INR 1,500/t was recorded in Central India, following a sharp hike in bid price in SAIL pig iron auction.
India’s finish long steel market via induction route has witnessed an upward price trend in this week, and the rebar prices moved up by INR 400-1,300/t w-o-w basis in all over the major supplying locations.
- Trade reference rebar prices of 10-25 mm through midsized mills assessed at INR 42,300-42,600/t exw Raipur, INR 46,300-46,700/t exw Jalna.
- Trade discount given by Raipur based heavy structural steel manufacturers is at INR 600-1,000/t and trade reference price of 200 mm angle is stood at INR 44,900-45,300/t exw Raipur.
- Trade discounts in Raipur wire rod are currently at INR 600-800/t and trade reference prices stood at INR 42,200-42,500/t exw Raipur, INR 42,200-42,500/t exw Durgapur, size 5.5 mm.
India’s domestic HRC prices remained range-bound this week. SteelMint’s benchmark prices for 2.5 mm thickness HRC stands at INR 53,500-54,500/t exy Mumbai, up by INR 250/t as compared to last week. Prices are expected to bearish in the near term as:
- Increase in iron ore supplies- Serajuddin mines have resumed iron ore offers on 16th Feb after a gap of over two months. Two of Odisha’s auctioned mines – Guali and Jilling have commenced production with a combined capacity of about 12 mn t pa. India’s largest iron ore miner – NMDC has restarted operations at its Donimalai iron ore mine, the company said in its recent BSE filing. This, in turn, may lower steel prices in the near term.
- Stockists holding sufficient inventories-Earlier when prices were peaking at an abnormally high rate, big distributors procured huge quantities of HRC as the market was very volatile. However, the move has led them to a point wherein they have sufficient inventories with them and the panic to procure stocks does not exist.
On the other hand, mills have increased their export allocations and are not facing any pressure to sell material at local markets.Currently, mills have raised HRC export offers by $15-25/t and offering around $740-750/t CFR Vietnam,$750/CFR to UAE, and around $825/t CFR to Europe for late March early April shipments.
Indian government-owned SAIL has scheduled two auctions for a total of 12,550 t pig iron. The first auction is to be held on 03 Mar’21 for 8,550 t from Bokaro Steel Plant while the second auction is to be conducted on 04 Mar’21 from IISCO, Burnpur for 4,000 t. The previous auction from Bokaro was concluded at INR 33,150/t exw and the last auction from IISCO received bids at INR 32,000/t exw.
The domestic HR-plate price rebounded this week after six weeks of subdued demand and dull trades dragging the prices down in the trade segment. SteelMint’s benchmark assessment for the HR-plate (IS 2062/E350) for 5-10mm has increased by INR 750/t and stands at INR 53,000-53,500/t exy-Mumbai. Price is exclusive of GST @ 18%. However, in other market trades remain subdued on bearish demand and slow buying.
Plate prices may correct further due to the following factors:
1. Demand continues to remain slow- End-user’s demand in the trade segment remains subdued with buyers anticipating prices to weaken further. Buyers continue to remain on a wait-and-watch mode showing reluctance to buy at higher prices. Major OEMs are still procuring materials on an urgent requirement.
2. Few projects are on hold- “Orders booked are 30-40% less as compared to previous month bookings,” shared by major plate producers to SteelMint. Most of the projects are held up. Even export orders in some segments like oil and gas are held up as they are waiting for the new policies by US President Joe Biden. Due to these factors, buying activities reduced which may lead to further correction in prices
3. Higher inventories- Inventory levels in the retail segment are high on slower trades for over a month. Traders have been trying to liquidate their inventories since the prices started to fall in mid-Jan ’20 while trying to maintain their profit margins.
Global HR plate market- Chinese mills have sharply raised HRC plate export offers by around $55/t w-o-w basis. Current offers are hovering in the range of $685-690/t FoB China. Last week the offers were in the range of $630-635/t FoB basis.
Export offers are expected to remain on the higher side on resumption of trades post the week long Lunar New Year holidays.
Near-term outlook on Indian plate prices- One of the major steel mills has started offering discounts on plates to escalate buying in the domestic market. Also, market participants believe that mills might roll over or even provide discounts for year-end clearance. However global plate prices are expected to increase on possible export rebate cuts in China.
Japan – the world’s leading ferrous scrap supplier seen a drop in scrap imports by 34% m-o-m and stood at 0.48 mn t in Jan’21, as per data recorded with SteelMint. Vietnam continued to be the largest buyer, followed by South Korea and Taiwan. Higher Japanese scrap export prices resulted in decline exports in Jan’21
SteelMint daily billet index has been assessed at INR 38,500/t (+300) exw Raipur on 27th Feb’21, 16:00 IST.
A total of about 2,900 t billet trades were recorded today, as against 9,060 t yesterday (i.e. 26th Feb).
- This index has been derived based on transactions, offers, bids and indicative price data sets. Transactions are considered as T1 and given a weightage of 50% whereas other data sets are considered as T2 and given a weightage of the balance 50%.
- Transactions (T1)- Eight trades were recorded in the 11:30 am to 3.30 pm SteelMint trading window and considered for final price calculation as T1 inputs. Out of which, four trades were recorded at INR 38,600/t, two at INR 38,500/t & two deals at INR 38,400/t. The average price of these eight transactions was INR 38,538/t and given a 50% weightage in the final price calculation.
- Other Price Indicators – bids/offers/indicative (T2)– Seven offers reported in the trading window and considered as T2 inputs. The average price of these seven was INR 38,500/t and given a 50% weightage in the final price calculation.
The final price for billet exw Raipur was at INR 38,519/t, rounded to INR 38,500/t exw.
Indian steel industry emerges from COVID setback, demand green shoots seen: Indian steel industry witnessed a decline in steel output which fell by 12% y-o-y in CY’20 owing to reduced capacity utilization during the lockdown. Domestic iron ore supply shortage pushed up the prices to record high levels on the delayed resumption of auctioned leases in Odisha. However, with easing of lockdown measures and pent-up demand from the auto & construction sector, mills ramped up capacity utilization to over 90-95% towards year-end from 30-40% in Apr’20.
- Auto sales dropped by 21% to reach 17.07 million units in CY ’20: Pandemic slowed down the economic growth of India resulting in sluggish auto demand, consequently posing a y-o-y dip of 21% in auto sales.
- Crude steel production dropped by 12.3% to reach 95.6 mn t: Reduced capacity utilization during lockdown lowered output.
- Steel exports rose by 44.2% to reach 17.3 mn t: Subdued downstream demand amid pandemic & active Chinese buying boosted exports from India.
- Steel imports declined by 40% to reach 3.9 mn t: Higher landed cost limited imports to India.
- Iron ore production fell by 15%: Delay in the resumption of auctioned mining leases in Odisha impacted production. India’s total iron ore production fell by 15% y-o-y to 200 mn t in CY’20.