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International thermal coal hits four-year low

Domestic steel prices are likely to remain steady in the near term on the back of imposition of safeguard duty, a decline in imports, maintenance shutdown and preMonsoon restocking. In the medium term, concerns around oversupply (domestic and global), slowing global GDP amid tariff uncertainty and possible devaluation of the CNY could put pressure on the steel industry. The uptick in international coking coal prices from March lows and increase in domestic iron ores prices is set to hurt margin of steel firms in Q2FY26. On the non-ferrous side, while key aluminium raw materials viz thermal coal and alumina continue to fall, low levels of LME inventory are expected to prevent the sharp fall in aluminium prices. Currently, LME inventory is at a 27-month low.

Global steel production rebounds in March: According to the World Steel Association, March marked the first positive turn in global crude steel production for CY25, up ~3% YoY. This improvement was led by a ~5% YoY increase in China and a ~1% YoY rise in the rest of the world (RoW). On a monthly basis, global crude steel production jumped ~15%, driven by lower working days in February coupled with ~18% growth in China and ~11% in RoW. Notably, China’s steel exports rose ~6% YoY and ~30% MoM to ~10.5mn tonne in March, rebounding after two months of decline.

India’s crude steel production up ~5% YoY in FY25: In India, crude steel production rose ~7% YoY and ~1% MoM in March. For FY25, India’s crude steel production stood at ~151mn tonne, up ~5% YoY. Finished steel consumption showed a strong trend in FY25, rising by ~11% YoY to ~152mn tonne. Finished steel imports increased ~15% YoY to ~9.5mn tonne in FY25 whereas exports declined ~35% YoY to ~5.0mn tonne. Provisional data for April indicates India’s crude steel production rose ~7% YoY but declined ~6% MoM.

Mixed steel price trend across geographies: In April, China’s export prices for hot rolled coil (HRC) declined ~1% MoM, marking a second consecutive drop. Similarly, US HRC prices also fell ~1% MoM, following a sharp ~31% MoM increase in March. On the other hand, HRC prices in North Europe continue their upward trend, up~7% MoM, while Japan saw a ~1% MoM uptick. In India, primary long and domestic HRC prices rose ~3% MoM each in April, with May-to-date domestic HRC prices increasing a further ~1% MoM. Meanwhile, iron ore prices in China and Australia declined ~3% MoM each in April. Mayto-date iron ore prices are further down by ~1% MoM each in China and Australia vs April average. In India, NMDC announced a price hike of INR 440/tonne each for lumps and fines on 1 May 2025.

Key non-ferrous prices under pressure in April: In April, prices of major non-ferrous metals witnessed a correction after posting a strong MoM rise in March. LME aluminium recorded the sharpest drop of ~11% MoM, followed by LME zinc down ~9% MoM. Other non-ferrous metals, such as LME copper, LME lead, and LME nickel, also saw a decline of ~6% MoM each. Also, China alumina prices declined by ~10% MoM, registering fourth consecutive month of decline. May-to-date, alumina prices are largely flat compared to April average, indicating stabilization after April’s correction.

Mixed trend visible in coal prices: After a bearish trend for the past few months, April saw mixed movement in coking and thermal coal prices. Coking coal prices fell by ~1% MoM in China but rose ~6% MoM in Australia after four consecutive months of decline. Thermal coal prices in China fell ~3% MoM and ~1% MoM in South Africa. Current South African thermal coal prices are at their lowest since March 2021. May-to-date, coking coal prices in China are flat MoM while they are up by another ~4% MoM in Australia. May-to-date thermal coal prices in South Africa are down by ~1% MoM.

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