India Long Steel MArket Report_Feb6, 2013

Long Steel Market Report

A. Market Watch:

The long & scrap steel market remained sluggish over the week demand worries still haunting the market. The sentiment remained fatigued with hardly any hint of real demand in the market. The prices have remained more or less sticky to its previous levels.

The Market Reality:

Ingot

The ingot market exhibited a subdued trend over the concluding week of January. The demand has rock bottomed and the market sentiment in extremely weak.

Semi- The market for semi-finished steel showed brittleness all across the country. The demand from the downstream industry was weak which weighed on the semi-finished steel finished demand.

Weak construction sector and slow infrastructure activities have kept the finished steel Finished market subdued in the last one week. The prices have witnessed a downward pressure.

Scrap Steel

The steel scrap market exhibited a stable but a sluggish trend despite a feeble demand in the market.

Situation remains bleak for the semi-finished steel items !!

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The semi-finished market remained shaky over the week as the demand conditions remained frail. The prices of semi-finished steel like billet, bloom, skelp, etc have declined at most locations of the country with buyers shying away from the market. Durgapur & Raipur saw a price drop of around Rs. 1,000/MT over a week.

Prime Billet Prices in the eastern part of India: Durgapur

Raipur

• Rs. 29,450/MT (basic)

Rourkela

• Rs. 29,400/MT (basic)

• Rs. 29,200/MT (basic)

Source: Steel Mint

Finished Steel market remained down !!

The finished steel market continues to remain weak and the buyers are not interested in purchasing at bulk at the moment. The crisis in the construction and infrastructure sector continues to bite the finished steel segment.

TMT Prices at Raipur: Dates 23-Dec-12

31-Dec-12

7-Jan-13

28-Jan-13

2-Feb-13

AC-TMT

32800

34210

34800

33110

33010

AC-TURBO

32900

--

34900

33410

33010

NIRMAN

32600

34300

--

--

--

PRIME GOLD

--

34600

35600

--

--

SUPER

32800

34100

34200

33000

32800

ATLAS

32700

34500

34800

--

--

The above prices are in Rs/MT (basic)

Source: Steel Mint

Imported scrap offers to Indian market more or less remained stable last week, with offers for shredded scrap (containerized) varied from USD 420-425/MT CFR, Mumbai, from European exporters, whereas US exporters heard to have kept offers at around USD 425/MTt CFR, Mumbai. Although buying interest was limited on factors like falling sponge iron (DRI) prices in domestic market and weak Rupee against US dollar.

Melting Scrap (HMS 80:20) Prices in the eastern part of the country: Raipur

• Rs. 24,100/MT (basic)

Durgapur

• Rs. 23,700/MT (basic)

Jamshedpur

• Rs. 24,550/MT (basic)

Source: Steel Mint Pig Iron Market Snapshot: • NINL was found to slash its steel grade pig iron prices further by Rs. 500/MT on Jan 07, 2013 and again they th reviewed their prices on Jan 17. However, on account of sluggish demand scenario, NINL on 17 Jan decided to

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keep the prices fixed at Rs. 22,000/MT (basic). NINL is also offering discounts as high as Rs. 400/MT for bulk purchase over 7,000 MT bringing down the price to Rs. 21,600/MT (basic). As per the market sources, booking doesn’t seem impressive.

• RINL too finding it difficult to dispose their materials as the overall demand continues to remain slackened. In the second week of 2013, RINL managed to conclude a deal of 1 lac tons of Pig iron at Rs 21,400/MT (Ex works Vizag). Now the injection of this 1 lac tonnes in the market has made the demand oversupplied. Hence a further correction may be witnessed in the coming days.

• NINL & RINL are again expected to review their prices in the first week of February. The direction of their price revision remains unclear at the moment.

B. A Snapshot of the Steel Market: The Weekly Market Sentiment Tracker: Commodity

Bearish

Neutral

Ingot

Semi-finished steel market

Finished steel market

Scrap steel

Bullish

Rationale The steel ingot market depicted as weakening scenario. Prices remained brittle on account of no takers in the market.

The market for semi-finished steel remained broken. The prices dipped across the country.

The finished steel sector slipped further down as the end-user sector’s demand remained feeble. The construction and infrastructure sector remained bleak.

The market for scrap steel didn’t show much movement and remained sluggish.

C. Market Scenario: The Hard Facts & The Challenges

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• The dwindling demand and falling prices which started since mid of January was still visible in its concluding week.

The market lacked both strength and interest to make a come back and ended up in remaining by and large slow and sluggish on all counts. Poor demand from the construction sector, liquidity crisis among the buyers, unwillingness on part of the buyers to go for bulk purchase, economic worries, etc kept the market down.

• The ingot price plummeted expectedly with the expectation of credit easing fading away. With barely 2 months to go for the culmination of FY’12-13, the revival seems to be lost cause even if there is some cutback in February with barely month to go after that.

• The much talked about monetary policy review by RBI turned out to be a whimper with mere 25 basis point reductions in repo rate. Optimism was doused as expectations went rife. Even though it was the first repo rate cut in 9 months market expected 50 basis point roll back to gain foothold. Repo rate now stands at 7.75%. The steel market is yet to show a positive reaction to such a policy decision. The money market reacted negatively to such a decision as SENSEX lost 112 points & NIFTY lost 25 points immediately after the announcement by RBI.

D. Market Information: Ingot Price Trend over a Week: Places Feb 04 Feb 02 Raipur 28800 28800 Durgapur 28500 28580 Source: Steel Mint,

Feb 01 28800 28330

Jan 31 28800 28410

Jan 30 28700 28240

Scrap Import Market Scenario as on Feb 02, 2013: PORTS ORIGIN GRADE NHAVA SHEVA

UK, EUROPE, Dubai

Jan 29 Jan 28 Jan 25 28700 28800 28900 28240 28500 28670 Price in Rs /tonne is basic

PRICE

SHREDDED

400-425

HMS(80:20)

390-400

HMS(80:20)

395

KANDLA US HMS(80:20) 400 Prices are in USD/MT (CFR prices), USD = INR 53.13 Source: Steel Mint Sponge Iron Prices across the country: Date Raipur

Rourkela

12-Jan-13

21200

18900

17-Jan-13

20600

19100

22-Jan-13

20200

18600

28-Jan-13

20100

18600

30-Jan-13 2-Feb-13 Price in Rs/MT (basic)

20000 20000

18400 18400 Source: Steel Guru

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Ingot Trend over the last two months:

Steel Ingot Price Trend

32000

Price in Rs/MT (basic)

31000 30000 29000 28000 27000 26000 Dec'12 Dec'12 Dec'12 Dec'12 Jan'13 Jan'13 Jan'13 Jan'13 Jan'13 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 5 Ingot at Raipur

Ingot at Durgapur

Price in Rs/tonne is basic

Source: NCDEX, Steel Mint

Ingot Prices – A Change over a Week:

Weekly Change in Ingot Prices

29200 29000

28900

Price in Rs/MT (basic)

28800

28800

28600

28500

28500

28400 28200 28000 27800 27600 27400 27200 Raipur

Durgapur 28-Jan-13

Price in Rs/tonne is basic

4-Feb-13 Source: NCDEX, Steel Mint

E. Market Analysis: 5

International Market Scenario at a glance:

Turkey’s scrap import market was slightly livelier in the week of January 28-February 1 as mills andsuppliers from the US East Coast in particular negotiated over a reasonable price for February deepseashipments. Thursday saw two deep-sea bookings made from North America. One was at $397/metric ton for premiumHMS 1&2 (80:20) off the USEC; the second was from Canada at $393/mt CFR Marmara. The Canadiansupplier had begun by offering its mixed cargo at $405/mt CFR Turkish ports, but failed to find support at that level.

The latest scrap reference prices released by The Steel Index (TSI) last Friday (Feb 01) show that its weekly USscrap reference price fell by 0.8%. The weekly average of its daily Turkish scrap reference prices dropped by $6/metric ton since the previous week, with the daily Turkish reference price moving steadily downwards during the week. The Indian containerised weekly scrap reference price also slipped slightly. In the US, the weekly domestic shredded obsolete scrap reference price fell by $3/long ton to $387/lt delivered US Midwest mill. Although the onset of winter weather slowed collection rates, new sales were concluded at slightly lower levels.

• The ingot price plummeted expectedly with the expectation of credit easing fading away.

With barely 2 months to go for the culmination of FY’12-13, the revival seems to be lost cause even if there is some cutback in February with barely month to go after that.

• With the FY 2012-13 is coming to end the sellers are slowly getting more keen to dispose of their stocks so on the supply side there is a little push.

• The market sentiment kept low and is expected to slump further in the coming days as the negativities have strated to encompass the market.

• The buyers are skeptic and apprehensive about thje future market are not expecting much movement till the end of the current FY 2012-13.

Expected Movement

• The market for steel sector slipped down further over the last week as demand scenario weakened further.

Market Sentiment

Flash Factors

Domestic Market Analysis of Long & Scrap Steel Products: • On such a backdrop of bleak demand scenario, gloomy market factors, weak macro economic parameters, weak end-user sector demand and crisis in the general liquidity of the market the long steel prices are not expected to show any improvement is the coming days.

• Moreover, with the sellers willing to release their inventory in order to clear their stocks as the current FY is coming to a close, there is slight increase in the supply of the material in the market. Thus a further fall in the long steel prices if witnessed in the coming days will not be something shocking.

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