Steel prices crash 13-15 per cent in July

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Global steel prices, including Indian mills’ export prices, saw a downward correction of 13-15 percent, month-on-month due to seasonal weaker demand, recessionary pressures around the world, and a looming economic slowdown in China.

For hot rolled Indian coil – standard supply – prices are $639 a ton, FOB East Coast, down $93. Trading sources say HRC prices were around $732 a month ago.

Weak request

Major steel markets such as Europe are reducing consumption as geopolitical tensions (primarily Russia – the war in Ukraine) drive gas prices – used in homes and factories – up 700 per cent. This has led to unprecedented inflationary pressures that have slowed steel demand.

Indeed, there are concerns about energy availability and energy prices in Europe later this year as EU countries impose more sanctions against Russia. From August 10, trade (between European countries and Russia) is supposed to stop in some commodities such as coal, while Russia’s Gazprom cuts 60 percent of gas supplies from the Nord Stream pipeline. Power plants in Europe are already making extra efforts to revive their coal-fired facilities.

In China, a major steel producer and consumer market, long-term demand for steel — used in construction — is weak, trade sources say. Rebar prices continue to fall there. There is some hope of an economic stimulus and an infrastructure drive to revive demand. “In Northern Europe, buyers are expected to resume restocking for September from the end of July. So there is something Indian exporters can look forward to. But, there is an export duty overload to be taken care of as well,” said an official at a steel mill.

Indian factories are also hoping to withdraw export duties “soon” or “phase them out” as they hope to revive demand in Europe. Shipments in June were down 20 percent sequentially and 53 percent year-on-year.

According to the latest documents available with the Union Steel Ministry, Italy, Belgium, Turkey, UAE and Nepal are among the major markets, accounting for 53 percent of exports in April and June.

world prices

Traditionally, July and August are the weakest months for steel demand. With inventory positions depleted by August/September, factories are hoping for an upward movement in prices. SteelMint data shows that HRC FoB prices in China lost 20 percent in mom to $618 a ton and CRCs lost 15 percent to $710 a ton.

HRC FoB rates in the Black Sea lost 15 percent to $600/ton, while in Japan they fell 20 percent to $650/ton.

In Vietnam, there was a 15 percent drop in prices, to $640; In Turkey, the decline (in rebar prices) was 5 percent to $710 per ton.