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Flat Steel Market To Be Optimistic In December 2023?
3 months ago
Mild Steel
Mild Steel
Insights
OfBusiness
OfBusiness

Flat Steel Market To Be Optimistic In December 2023?

Summary
In early November 2023, the Indian Flat Steel market showed stability in plant offers, yet certain regional sellers offered discounted rates, lowering trade reference prices by Rs. 200-600/ton. Market participants now anticipate a price upturn later this month.

In the first half of November 2023, the Flat Steel market in India experienced a lack of significant changes in plant offers. In certain regions, distributors were observed offering HRC and CRC at more competitive prices.

Despite the offers remaining mostly stable, some producers decided to sacrifice their profit margins to maintain a consistent pricing range and clear their accumulated inventory at manufacturing plants. Sellers have also adjusted their reference prices for HRC and CRC, working with reduced prices in the domestic market, typically lowering them by around Rs. 200-600/ton.

Driving Factors Behind Optimism

The market participants are expressing optimism about a potential price rebound moving forward. Let’s delve into the factors driving this positive sentiment in the market:

1.    Export Resumption: In India, market participants are feeling optimistic about the short-term prospects of HRC exports, with the European Union market anticipated to be a key driver of growth. Additionally, production cuts in China and rising HRC futures prices may provide further support to Indian HRC export offers.

2.    Rising International HRC Prices: Chinese HRC futures remained stable in a calm market environment. The January 2024 HRC contract on the Shanghai Futures Exchange recorded a modest gain of CNY 42/ton, reaching CNY 4,059/ton.

In contrast, US HRC prices have shown an upward trend, currently ranging between $880-910/ton, up from last week’s $870-900/ton. Meanwhile, CRC prices have held steady at $1,050-1,150/ton. Strong order books are anticipated to continue into Q1 2024, with extended lead times for HRC into January 2023 and beyond into February for other products.

Furthermore, Italian CRC and Hot-Dipped Galvanised Coil (HDG) prices have experienced notable increases, surging by more than €50-52/ton ($53-55) since the beginning of the month. Over the past three weeks, market activity has gained momentum, with producers promptly fulfilling their January orders while quoting February lead times. Sellers have reported higher sales volumes, signalling a positive resurgence in demand.

Improved Global Trends

In November, the imports appeared economically challenging due to soaring global Steel prices and a consistent upward trend in the global Iron Ore futures index over the past week. OfBusiness assessed that Chinese Iron Ore Lumps Fe 62% and 65% surged by $0.13-0.15/ton and $0.82-0.85/ton, reaching $135/ton and $146/ton CFR Qingdao, respectively. Additionally, Fines Fe 58% increased by $0.86/ton to $127/ton CFR. 

This momentum extended to the international Steel Scrap market, with most Taiwanese Steel mills maintaining stable Scrap purchase prices, including HMS 1 Scrap at TWD 11,100/ton ($348/ton). 

Turkish mills also raised their domestic Scrap purchase rates due to strong market activity. Meanwhile, imported Scrap prices remained firm, with suppliers aiming for higher levels, typically in the range of $397-400/ton.

Global Logistics Concerns Arise 

Typically, there is heightened concern in the global logistics sector during the winter season. As December approaches, the global market experiences disruptions. Market activities tend to slow down significantly from the second week of December due to the festive spirit of New Year and Christmas. Consequently, many shipments often face delays.

Market Outlook

Overall, while there is currently a lull in demand and some minor fluctuations in Flat Steel prices, it’s important to view this as a temporary situation. In India, there is a sense of optimism among market participants regarding the short-term outlook for exporting HRC, particularly with expectations of significant growth in the European Union market. Furthermore, the combination of production reductions in China and the upward trend in HRC futures prices could offer additional support to Indian HRC export opportunities.

OFB’s Insight

The Flat Steel market in India witnessed stability with slight price adjustments in November 2023. Export prospects for HRC and rising international HRC prices, especially in the

European Union and the US, show promise. Improvement in the global trend for Steel and scrap prices indicates positive momentum. However, global logistics concerns may impact market activities as December approaches. Overall, optimism prevails for Indian HRC exports amid these dynamics.

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