Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Indian steel industry is showing signs of recovery as production rate has gradually approached pre-COVID lockdown levels. Major steelmakers like SAIL, JSW Steel, Tata Steel and ArcelorMittal Nippon steel have started operating at 85-90pc capacity at most of their plants, while a few plants are running at 100pc capacity utilisation on a positive outlook. The demand for the raw materials has also turned bullish on short supply, pushing finished steel prices up in the country.  


Major steelmakers hike finished steel prices by upto Rs2,000/mt ($26.66)

-ArcelorMittal Nippon Steel announced a hike in flat rolled prices by Rs1,500/mt ($20/mt) this week. The company’s plant at Hazira in Gujarat is now operational at 100pc capacity amid recovery in domestic steel demand. Iin June, AMNS raised retail prices of hot-rolled coil (HRC), cold-rolled coil (CRC) and rebar by 1.43pc, 1.69pc and 2.17pc, respectively, after COVID related lockdowns were relaxed and exports saw a consistent surge. 


-JSW Steel’s prices for long products and flat products rose by Rs1,200-2,000/mt for August shipments. The current offers for hot-rolled products stand at Rs39,000/mt ex Mumbai. On the other hand, HRC offers in export markets too have raised sharply.  

-Jindal Steel and Power Limited’s managing director VR Sharma revealed in a recent interview that the company expects domestic steel demand to recovery as steel prices too have bottomed out now. 


In the domestic steel market in last two weeks, pellet and iron ore prices have increased by about $10/mt, while global ferrous scrap prices rose by $25-$30/mt. High input cost has kept finished steel prices firm.


Shifting focus on domestic sales from exports – The gap between domestic and exports prices for finished flat steel was reportedly 7-8pc. The domestic sales prices remained lower than exports amid sluggish demand. With recent rise in domestic steel prices, this gap is expected to narrow till 4-5pc in August. Presently, HRC export prices have been reported at $515-520/mt cfr China.  


Davis learned from company officials that most of the steelmakers will focus on domestic steel markets in the coming months over exports.  


Headwinds ahead – Despite change in market sentiments, headwinds could keep overall demand fragile. Onset of monsoon has kept execution of construction projects on backburner. There are still many corporate facing liquidity crunch and limited inflows from the Government.  


It is still uncertain how quickly new construction projects would pick up momentum and automobile sector return to pre-COVID levels demand.

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