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

India’s primary steel mills have increased long steel prices by Rs500-1,000/mt ($7-13/mt) for the rest of August in line with higher input costs and pick-up in domestic steel demand. It is quite rare that steel prices are hiked in India during monsoon season.


RINL or Vizag Steel increased prices of all its long products by Rs500-1,000/mt on Tuesday for rest of August shipments, said sources to Davis Index. On Monday, Steel Authority of India Limited (SAIL) raised rebar and billet prices by Rs500-800/mt. JSW Steel had increased rebar prices by Rs500/mt last Friday. Market participants expect further price hike in September and October but it remains to be seen whether the current price increases will be absorbed by the market.


Primary mills offered rebar at Rs38,500-39,000/mt ($515-521/mt) ex-Mumbai on Tuesday, up from Rs37,500-38,000/mt in mid-July. The daily Davis Index for rebar in Mumbai remained unchanged and settled at Rs34,800/mt ($465.24/mt) ex-works on Tuesday. 


In early August, almost all primary steel producers increased prices of both long and flat products by Rs1,000-2,000/mt in-line with the with price increase seen in the global market. Export of steel products, mostly semis and flat products, continues to be strong resulting in reduced inventories which is supporting steel prices in the domestic market. Exports are expected to reduce in the Q2 compared to Q1 as prices improve in the domestic market with the gradual opening of the economy. This price parity will help steel mills achieve better realization both in the exports as well as domestic market. 


In Q1, Tata Steel, JSW Steel, JSPL exported around 50-60pc of their total output but in the current quarter Q2, they have guided that exports could drop to 25-35pc as domestic demand picks up.


Rise in iron ore prices

With the steady recovery of the Chinese economy, there has been a significant rise in international iron ore prices in the last three months. Iron ore spot prices are at around $121.5/mt cfr China, which is a 13-month high. Higher steel output in China despite a drop in exports has elevated international iron ore prices.


In August, India’s NMDC raised iron prices twice, hiking prices up by Rs500-600/mt for both lumps and fines in line with global cues and a demand-supply mismatch in the domestic market. In March, the Odisha government auctioned 20 iron ore and manganese blocks in the state. Among the new allottees, only ArcelorMittal Nippon Steel India (AMNS India) and JSW steel have commenced mining operations at their mines, both of these companies will consume the ore for their captive steel production. Other new miners, mostly merchant miners, are yet start mining leading to a short supply of iron ore. Also, heavy rain in many regions is hampering mining operations in India.


($1= Rs74.81)

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