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

Indian steelmakers have raised finished steel prices effective September amid strengthening global market expectations, increased input costs. 

Major HRC producers also state that a sharp rise in August iron ore prices has pushed steel mills to raise their finished steel prices. HRC prices are therefore expected to increase by Rs2,000-3,000/mt in September. 


Primary steel producer, Tata Steel is set to increase steel prices by Rs3,000/mt ($40/mt) effective Sept 1, following which secondary steelmakers could increase product prices by around Rs2,000/mt. JSW Steel is also expected to raise prices by a similar amount, though a notification to this effect is yet to be out. Another major pipe maker is likely to raise long steel prices by Rs1,200/mt for September deliveries. 

Most downstream industries have started ramping up operations which could generate steel demand in the coming days. Mills believe recovering economic activities are set to increase trades and support raised prices in the coming days. 

Market participants are also expecting a revival in automotive demand ahead of upcoming festivals. 


Recovery in capacity utilization

Capacity utilization rates have been recovering steadily. Utilization rate which had dipped to 27pc in April amid the COVID-19 outbreak increased to 67pc in July. In September the average utilization rate is expected to reach 80pc surpassing last year’s 77pc.


Amid a lack of domestic demand, mills focussed on exports, mainly since prices were 8pc higher in the international markets over the domestic. In the coming months, mills are likely to turn their attention to Indian markets and domestic prices rise further. In the global markets, raw material prices including iron ore and imported scrap have moved up and may remain firm with recovering demand. 


Bullish global sentiments 

Chinese iron ore import prices surged to six-year high while HRC prices have jumped to $515-520/mt fob China from $495-500/mt fob China levels in early August. These prices are expected to reach April 2019 levels of $530-535/mt fob China levels in September. On account of this bullishness, Indian HRC exporters are also targeting $540-550/mt cfr China. China’s HRC sales recovered drastically in August with a drop in inventories. 


Steel exports reach a record high in July 

Indian steel exports in July rose from the prior month to 2.44mn, 7.5pc higher than 2.27mn mt in June 2020. In Apr-Jul 2020, steel exports touched 7.8mn mt against 2.89mn mt in the preceding four months of the year and a rise of 169pc from the prior-year period. Total steel exports were at 5.36mn mt in April-July. In the period, finished steel exports were 50pc higher than those in the first four months the year.


India’s crude steel output fell 24.6pc to 7.150mn mt during July 2020, from 9.485mn mt from July 2019 according to the World Steel Association’s data. Crude steel production for the 64 countries was 152.7mn mt, up 2.5pc down from the prior month. Major primary steel producers were, however, operating at 85-95pc utilization with indications of 100pc use in the coming months.



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