BNP Paribas India has released the India Steel Weekly Report – April 2024 wherein Mr. Priyankar Biswas, Analyst – India Industrials, Logistics and Metals, has shared his views in detail.

Appended herewith are some of the key takeaways of the report:

Domestic steel prices continue to rise; rebar prices at a 5 month high

• Highlights: China

o   Chinese steel demand forecast to decline 1.7% y y as real estate crisis continues; exports may exceed CY23 levels:

• China’s Metallurgical Industry Planning and Research Institute (MPI) forecasts a 1.7% y-y decline in steel consumption in China for CY24 following a 3.3% y y contraction in CY23. Chinese steel producers expect CY24 exports to be similar or higher than CY23 levels (c100mt in 2024 vs 91mt in 2023) ( LINK ).
• Mysteel forecasts steel demand in China from the automotive sector (6 7% of steel demand) to rise 2.5% y y to 48.4mt in CY24. This is likely to be driven by increasing application of high strength steel and the growing demand for alloy steel in new energy vehicles (NEVs).
• Globally anti-dumping measures against Chinese steel are rising with 112 country applications for anti-dumping and anti-subsidy measures against steel products from China in CY23, which is about 20 more than in CY22. Currently, China’s Politburo meeting scheduled for late April is a key event to watch, as it may result in easing of existing property policies to boost sales (including lifting home purchase restrictions).

o   China HRC spreads decline w w due to rise in coking coal prices:

• Domestic HRC prices in China were stable w-w (week ending 26 Apr 24). Average prices for Apr 24 at USD582/t were at the lowest since Oct 23.
• Global iron ore prices were stable w-w, while coking coal prices rose by USD6/t w-w.
• HRC spreads fell 2.4% w-w due to the rise in coking coal (+3.2% w w) and iron ore (+1.1% w w) prices, and flat w-w HRC prices.
• For Apr 24 (average), the HRC spread rose 12% m m, led by a sharp decline in prices of coking coal ( 16% m m) and iron ore ( 2.7% m m), even as HRC prices fell 1.5% m m.

• Highlights: India

o   Indian domestic HRC prices rose sharply by INR475/t w w, totalling a cINR1,500/t rise in two weeks; rebar prices rose INR2,800/t in two weeks to the highest levels since Nov 23:

• Domestic HRC prices rose INR475/t w-w (week ending 24 Apr 24) to INR53,400/t (flat for average Apr 24 vs Mar 24). Domestic HRC prices are now at a premium to import prices from South Korea/Japan and at par with import prices from China. This suggests limited scope of rise in domestic HRC prices.
• Domestic rebar prices have continued to rise since Jan 24 to INR56,300 (+INR2,430/t m m in Apr 24 vs Mar 24 average). This is due to strong domestic demand in India, especially from the construction sector. Rebar prices are at a cINR2,050/t premium to HRC prices in Apr 24 (vs 10 year average discount of INR3,200/t). Rebar inventories have continued to decline in Apr 24. Rebar demand remained strong from the project segment and restocking demand for construction ahead of elections. Furthermore, some Tier 1 mills have taken maintenance shutdowns..

o   Indian HRC spread was flat w w as the rise in coking coal prices offset the rise in domestic HRC prices:

• Indian HRC spread (week ending 24 Apr 24) was flat w w, as the increase in domestic HRC prices (+0.9% w w) was offset by the rise in coking coal prices (+3.2% w w). Average HRC spread for Apr 24 rose 8.6% m-m, led by a 16% decline in coking coal prices. HRC prices were flat m m.

o   Tata Steel plans to proceed with GBP1.25b investment to build an electric arc furnace (EAF) facility in Port Talbot:

• Tata Steel (TATA IN, Not Covered), earlier announced the closure of the existing blast furnaces (BF) in Port Talbot and replace them with an EAF. It intends to place orders for the required equipment in Sep 24 and plans to commence construction by Aug 25. The replacement of BFs with the EAF could help cut emissions by 5mtpa.

o   Tata Steel’s CEO cautions on steel imports into India following surge in imports to 8.32mnt (+38% y y) in FY24:

• Indian steel imports have risen sharply, making the country a net importer. Tata Steel’s CEO Mr TV Narendran stated that the Indian steel industry must be watchful of imports and that the government needs to deal with “unfair imports”. However, he acknowledged that the government’s review of the free trade agreements (FTAs) to curb imports as requested by domestic steelmakers would not be easy. He expects steel demand to grow by 8 10% in FY25, after a 14% y y growth to 136mt in FY24 .