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Global crude steel production down ~5% YoY in April
Data from the World Steel Association (WSA) states global crude steel production in April dropped ~5% YoY to ~156mn tonne, hit by ~7% YoY and ~2% YoY fall reported by China and the rest of the world (RoW). On a MoM basis, crude steel production slipped ~3%, due to decline in production in China and RoW by ~3% MoM each. Rising inventory and weak demand in China is causing the mills to keep their production low. In April, India's crude steel production saw growth of ~4% YoY and fell by ~6% MoM to ~12.1mn tonne. As per provisional data, India's crude steel production in May grew ~6% YoY and ~4% MoM to ~12.5mn tonne. Exports from China continues to rise YoY. In April, it stood at 9.2mn tonne, up ~16% YoY. January-April 2024 exports stood at 35mn tonne, up ~25% YoY.
Steel prices recover in most geographies in May
Exports prices of hot-rolled coil (HRC) in China showed a MoM recovery of ~2% in May, following three consecutive months of decline. Japan saw a similar trend with HRC prices rising by ~2% MoM. In contrast, HRC prices in the US declined ~5% MoM, followed by ~1% fall in the EU. In India, long product prices rose for the second consecutive month by ~6% MoM in May. After six consecutive months of decline and a flat trend in April, HRC prices improved ~2% MoM in May. Current (June to date) domestic HRC prices are largely flat MoM. Apart from steel, iron ore prices in Australia and China increased ~5% MoM each in May. Current (June to date) iron ore prices in China and Australia are down ~7% MoM each vs May average. Domestically, NMDC announced a further price hike of INR 250/tonne for lumps and INR 350/tonne for fines in May after a price hike in April 2024.
Key non-ferrous metals see an uptick for another month
After a healthy April, May was another good month for key non-ferrous metals as LME Nickel and LME Zinc were up ~8% MoM each, followed by LME Copper, up ~7% MoM, LME Lead up ~4% MoM and LME Aluminium up~2% MoM.
Coal prices move north in May
In May, coking coal prices in China increased ~7% MoM whereas prices in Australia were flat MoM. On the other hand, thermal coal prices in China grew ~5% MoM while South Africa rose ~2% MoM. Current (June to date) coking coal prices in China are flat MoM while prices in Australia are up ~4% MoM, but thermal coal prices in China and South Africa are up by ~2% MoM each vs May average.
Our view: seasonality at play
We believe the onset of Monsoon will restrict construction-related steel demand, preventing any major upward movement in prices in the near term. Apart from that, flat steel prices may face pressure as imports of flat steel are likely to increase, following the renewal of BIS certification in June for one of Southeast Asia mills exporting to India. On the cost front, rising coking coal prices are likely to drag margin of steel firms in the medium term. |
