Price drops are to the tune of 5 per cent for
HRCs, 10 per cent for rebar and 6 per cent for CRCs.
India’s steel mills are witnessing a demand slowdown across
domestic markets with price of key offerings like rebars and cold rolled coils
(CRCs) dropping between 2 per cent and 5 per cent in July over June, and the
benchmark hot-rolled coil (HRC) being rolled over (remaining at June levels).
Monsoon and seasonal weakness apart, two key indicators for
slowing demand have been a near 5 per cent drop in production in June (over
May) and a higher monthly variation in stock levels (almost double the stock
being available in June over May), reports with the SteelMint show. Maintenance
shutdowns across mills happen in July–August period.
Falling prices
As per trade sources, the price of HRCs is around ₹55,000–55,200
per tonne for July, same as June, rebar prices (through the blast furnace
route) – a key supply material in home constructions and projects – dropped 5
per cent-odd sequentially to ₹51,500 per tonne (against ₹54,300 per tonne in
June), and CRCs – used in automobiles – saw a 2 per cent odd price drop in July
to ₹59,000 per tonne against ₹60,100 in June.
Price drops are sharper if compared to May. Price drops are to the
tune of 5 per cent for HRCs, 10 per cent for rebar and 6 per cent for CRCs.
“Rebar prices fell on account of monsoon which weakens
construction activities and CRC price fall is indicative of slowing demand in
general in July. However, HRC prices remain slightly stronger than others as
export prices / offers to Europe have remained somewhat firm and there is
restocking in those markets,”
As per a SteelMint report, HRC export prices to Europe were around
$670–680 per tonne (cost and freight Antwerp), “as Europe resumed purchases
before the seasonal slowdown (in offers) in the July – September period”.
Inventory Levels Inching Up
Across India, mills inventory levels have gone up in June. While
consumption was the lowest since April. Steel consumption in June (during
Q1FY23) at 9.88 million tonnes (mt), 5 per cent down against May’s 10.43 mt and
over 1 per cent down since April’s 9.99 mt.
In June, total finished steel production was 10.5 mt against 11 mt
in May. Across key steel-makers, including SAIL, production was down between 1
per cent and 9 per cent. However, during April–June period, production of
finished steel was up 11.7 per cent, the provisional numbers show.
Stock variation levels are also up in June that include higher
availability for the month on month. For instance, stock variation levels
(calculated net of production, export and import, opening stock and closing
stock) in June was 0.63 mt, up 91 per cent, over May’s 0.33 mt.
“In order to tackle high inventory levels, large
mills have started diverting excess steel inventory to value added product
rolling mills thus increasing their share of high margin value added
offerings,” said a SteelMint report.