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Prices soften with onset of monsoon

* Steel prices remained sluggish in May’25 due to the early onset of the monsoon. HRC hovered around INR52,000/t and rebar prices softened by 1% to INR56,450/t as mills offered discounts/rebates to augment sales.

* Channel checks suggest that prices are likely to remain under pressure owing to the early onset of the monsoon, which will limit construction activity. In early Jun’25, mills reduced rebar list prices by up to INR1,500/t.

* Chinese flat steel prices remained under pressure (fell 1% MoM to USD455/t in May’25), driven by weak domestic demand and oversupply.

* According to the Joint Plant Committee (JPC), crude/finish steel production was up by 5% MoM at 13.5/13.2mt in May’25. India’s exports dipped 5%, while imports increased by 14% MoM in May’25, primarily led by supply constraints caused by US tariffs/duties, leading to the rerouting of cheap imports. In May’25, finished steel consumption in India increased by 9% MoM to 13mt amid discounts/rebates offered by mills and some premonsoon restocking.

* Prices for non-ferrous commodities remained stable MoM during May’25, where aluminum prices stood at USD2,450/t (+3% MoM) and copper at USD9,500/t (+3% MoM). Even alumina prices rose 3% MoM in May’25. Zinc and Lead continued to hover close to USD2,600/t and USD1,950/t during May’25, respectively.

Input costs remain muted in May’25

* In May’25, NMDC took a price hike of INR440/t for both lumps and fines. However, NMDC cut Iron ore prices by INR140 for both lumps and fines in early Jun’25, due to weak demand from pellet, sponge and steel markets. We expect iron ore prices to remain volatile in Jun’25 amid weak market sentiment and muted demand during the monsoon.

* Premium hard coking coal prices (CNF Paradip, India) remained rangebound at USD180-200/t, due to weak demand globally. Average coking coal prices improved 5% MoM to USD206/t in May’25, led by monsoon-led restocking. Most companies expect coking coal prices to remain in a tight range in the near to medium term (during 4Q earning calls, companies guided coking cost to decline USD10-15/t amid low-cost inventory).

* Domestic coal production was up 3% YoY at ~93mt (achieved ~93% of monthly target), while Coal India production fell 1% YoY to 63.5mt in May’25. Domestic coal dispatches declined by 2% YoY to 89mt in May’25, led by weak power sector demand (dispatches to power sector fell 2% YoY).

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