Domestic Semi-Finished Steel Struggles With Continuous Price Decline

The domestic Semi-Finished Steel market in India has experienced a significant downfall over the past few days. Finished Steel mills are encountering low inquiries and a dull response from end consumers, further impacting Semi-Finished Steel price movement. In this article, let’s examine the factors contributing to the price decline, and provide a market outlook for the industry.

Factors Affecting The Market

• Price Plunge and Slow Demand

The Semi-Finished Steel market has witnessed a continuous price decline ranging from Rs. 300-800/ton compared to the previous day. Sellers are concerned about sluggish dispatches, leading to raised inventory concerns. In response to weak sentiments and uncertain scenarios, Billets and Sponge Iron sellers have been forced to reduce their offers, resulting in price plunges of Rs. 300-1,300/ton over three consecutive days.

Notably, the Sponge Iron market in Raipur experienced a major drop of up to Rs. 1,300/ton for DRCLO compared to prices on Saturday.

• Limited Finished Steel Mills Inquiries

The challenges faced by the finished steel segment, such as low inquiries and a lackluster response from end consumers, have had a direct impact on Semi-Finished steel prices and procurement. Rolling mills are now procuring materials based on immediate requirements, rather than building up inventory. Market participants anticipate further price corrections in Rebar and Flat Products due to these challenges. Traders and distributors have actively resorted to offering discounts and selling materials even below the prices offered by the mills.

• Raw Material Prices Exert Pressure

The prevailing Iron Ore and Coal prices have added to the downturn and increased pressure on the Semi-Finished Steel market. The recent OMC Iron Ore auction failed to receive significant bids, resulting in only a negligible quantity of 0.150 million tons being booked out of 1.364 million tons. This softening of prices has impacted the market sentiment. While Non-Coking Coal prices have remained relatively stable, the Sponge Iron market has not gained support due to mill owners having sufficient Coal stock and postponing purchases.

Currently, offers for RB2 Coal from Richards Bay, South Africa, stand at around $107/ton CNF Gangavaram, India.

Market Outlook

Given the ongoing challenges faced by the Semi-Finished Steel market, it’s safe to say that the market outlook remains uncertain. The market’s dependence on Finished Steel mills and end consumer demand will play a crucial role in determining its trajectory. Further price corrections in Rebar and Flat Products are anticipated as market participants seek to stimulate demand through discounts and lower prices. The availability and prices of raw materials, such as Iron Ore and Coal, will also influence the future direction of the market.

OFB’s Insight

The domestic Semi-Finished Steel market in India is currently grappling with price falls, limited inquiries from Finished Steel mills, and firm raw material prices. Slowdown demand coupled with the uncertain market scenarios, has prompted sellers to reduce their offers, leading to significant price plunges. The market outlook seems uncertain, with market participants expecting further price corrections and closely monitoring the availability and prices of raw materials. The industry’s recovery and stability will heavily rely on the revival of demand and the overall economic conditions both domestically and globally.

Read more: Limited Orders And Decline In Steel Prices Weigh On Indian Pig Iron Industry

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