India steel index remains stable w-o-w in lacklustre market

After spurting for a single week, the India Steel Composite Index remained almost stable for the week ending 11 August, 2023. It closed up a negligible 0.1% at 141.80 points against the previous week's 141.60 points.

It may be noted, the index had languished in negative zone for 16 weeks before rising in the previous week.

Both the longs and flats indices remained almost range-bound too. The India Long Steel Composite Index again slipped into a slightly negative territory, dipping 0.22% to end the week at?135.90 points (136.20), a level seen three weeks back with slight volatility in-between.

The India Flat Steel Composite Index, on the other hand, rose, albeit slightly, by 0.48% to 148 (147.30). This was its eight-week high.

Factors which influenced the index last week

Longs

Primary mills hike offers: After spurting a bit, the longs index again fell. But the fall was slight as primary mills announced an interim hike in rebar prices by INR 500/t ($6/t) with effect from 10 August.

As a consequence, trade segment rebars also edged up by INR 300/t ($4/t) w-o-w.

IF-route rebar prices fall: On the other hand, induction furnace-made rebars prices dropped by INR 500/t from INR 48,000/t levels on 8 August to INR 47,500/t by week-end amid tepid buying interest. Mills needed to offer discounts to lure back buyers, who had already bought in the previous week, fearing another price hike. Since IFs command 65-70% of the rebars market, their prices impact the index significantly.

Unsupportive raw material prices: Raw material prices were also not supportive last week. After rising in the previous week, these fell back yet again. Sponge iron prices fell by INR 200-350/t while scrap threw up a mixed picture. Domestic end-cutting and busheling prices fell by INR 200-600/t in certain locations but imported rose by $10-12/t CFR. In iron ore, the Fe62% fines index remained stable w-o-w at INR 4,200/t.

Flats

Trade level HR-CR coil prices rise: Flats were slightly better placed as trade-level prices of hot rolled (HR) and cold rolled (CR) coils rose by INR 500/t ($6/t). In the preceding week, mills had raised HR and CR coil prices by INR 750-1,000/t ($9-12/t), which impelled the trade segment price hike. However, trade volumes remained low.

The mills maintenance programme fuelled the price hike.

Export offers remain stable: The SteelMint HRC export index remained stable w-o-w at $570-575/t east coast India, in another maintenance spin-off. Mills had scant volumes for sale overseas and hence held back offers last week. Most markets- the Middle East, Vietnam and Europe -- were quiet. On the flipside, there is an emerging demand for HRCs from Nepal, which encouraged mills to raise offers by $10-15/t to buyers here over the last two weeks.

Outlook

New export offers may open up in the short term which could be slightly raised as Indian domestic prices are still above current global levels.

Meanwhile, market participants expect rebar prices to increase further by the end of the month on expectation of a demand upturn from September.

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.

SteelMint 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, SteelMint 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.