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Global crude steel production up ~3% YoY in November

The World Steel Association (WSA) data shows global crude steel production sustained growth for the second consecutive month, expanding ~3% YoY to 145.5mn tonne in November. This growth primarily was propelled by ~7% YoY rise in production for the rest of the world (ROW) while China’s showed a steady trend with no significant YoY change. However, on a MoM basis, production failed to show any upward movement for another month and contracted ~3%, dragged by a MoM fall of ~4% and ~3% in China and ROW, respectively. In November, India’s crude steel production rose ~11% YoY but dropped ~4% MoM. As per provisional data, India’s crude steel production rose ~8% YoY and ~2% MoM in December

Domestic steel prices remain weak in December

After a price recovery in November, December continues uptrend in steel prices across regions. China registered ~5% MoM rise in exports prices of hot rolled coil (HRC) in December, followed by North Europe, up ~4% MoM. Japan’s prices during 1-8 December and US prices during 1-15 December are up ~3% and ~19%, respectively, vs average November prices. On the other hand, steel prices in India remain under pressure for another month with a flat trend for HRC prices while prices of primary long products were down ~4% MoM, due to muted demand and availability of low-priced imported products. However, tier-I steelmakers recently announced a price hike of INR 500-1,000/tonne for select flat products for early January sales. In December, iron ore prices in Australia and China rose ~5% MoM each. January to date, iron ore prices in both regions are up~4% MoM each vs the December average. NMDC raised domestic prices by INR 200/tonne for lumps and INR 250/tonne for fines on 2 January 2024.

Prices fall of key non-ferrous metals barring LME copper

In December, prices of major non-ferrous metals, barring LME copper, fell MoM. LME aluminium prices fell ~1% MoM, followed by ~2% MoM drop in LME zinc, ~7% MoM dip in LME lead and ~3% MoM decline in LME nickel. On the other hand, LME copper prices were up ~3% MoM in December

Coal price fluctuations continue in December

Coking coal prices rose ~12% MoM in China and ~3% MoM in Australia. On the other hand, non-coking coal prices declined MoM, with China and South Africa witnessing a fall of ~6% and ~10%, respectively. January to date, coking coal prices in China are up ~2% MoM, but stable in Australia vs the December average. Further, January to date non-coking coal prices in South Africa are down ~4% MoM vs the December average.

Our view: outlook on near-term domestic steel prices slightly better

The continued rise in imports has been a challenge for domestic steel prices. However, an upward movement in global prices should ensure domestic steel prices bottom. Also, expected uptick in demand with the start of the busy construction season and likely reduction in imports due to the narrowing gap between domestic and import prices augur well for stability of domestic steel prices. With thermal coal prices sliding to a 33-month low, cost pressure may abate for aluminum manufacturers.