Steel prices crash 13-15 per cent in July

Global steel prices, including export prices of Indian mills, have seen a 13-15 per cent downward correction, month-on-month on seasonal demand weaknesses, recessionary pressures across the globe and an economic slowdown staring at China.

For Indian hot rolled coil — the benchmark offering — prices are at $ 639 per tonne, fob East Coast, down by $93. The HRC prices were around $732 a month ago, say trade sources.

Weak Demand

Key steel markets like Europe are reducing offtake as geo-political tensions (primarily Russia – Ukraine war raging on) lead to gas prices – used across homes and factories – rising by 700 per cent. This has led to unprecedented inflationary pressures leading to slowing demand for steel.

In fact, there are concerns over energy availability and energy prices in Europe later this year as the EU nations bring in place more sanctions against Russia. Beginning August 10, trade (between European countries and Russia) in some commodities like coal is supposed to stop, while Russia’s Gazprom is cutting off 60 per cent of gas supply from its Nord Stream pipeline. Power plants in Europe are already putting in extra efforts to revive their coal-fired utilities.

In China, a key steel producer and consumer market, long steel demand – used in construction – is weak, say trade sources. Rebar prices continue to decline there. There is some hope of an economic stimulus and infrastructure push coming in to revive demand. “In Northern Europe, buyers are expected to resume restocking for September from end-July. So there is something that Indian exporters can look up to. But, there is an export duty overhang which needs to be taken care of too,” said a steel mill official.

Indian mills are also hopeful of the export duty being withdrawn “soon” or “phased out” as it hopes for a demand revival in Europe. Shipments in June fell 20 per cent sequentially and 53 per cent, y-o-y.

As per latest documents available with the Union Ministry of Steel, Italy, Belgium, Turkey, UAE and Nepal are amongst the major markets, accounting for 53 per cent of the exports in April-June.

Global Prices

Traditionally, July and August are weaker months for steel demand. As stock positions deplete by August/September, mills are hopeful of an upward movement in prices. SteelMint’s data show China’s HRC FoB prices have lost 20 per cent m-o-m to $618 a tonne and CRCs by 15 per cent to $710.

The Black Sea HRC FoB prices lost 15 per cent to $600/tonne, while in Japan, it dropped by 20 per cent to $650 fob.

In Vietnam, there was a 15 per cent slide in prices to $640; and in Turkey, the fall (in rebar prices) was 5 per cent to $710/tonne.

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