Indian producers of stainless steel longs are forced to keep cutting output in November despite a sharp decline in October. Weak demand in the EU and high stocks weigh on the mills.
Indian STS longs makers, who always depend on exports, experienced a significant cooling down of buying interest among European customers. Domestic demand was also weaker than expected during the recent months. As a result, most mills had to cut production in October sharply. Prices at the level below the costs fueled this output reduction.
However, more than this move appeared needed to balance the market. “We thought cutting production in one month would help us to clear inventories, but stocks are still too high,” a major Indian longs maker told SMR. He also noted that his company reduced output by around a quarter in October.
Some other longs makers reported their plans to reduce production by an additional 10-15% this month, but “it is quite natural to lower utilization rate in November, as it is Diwali festival time, although demand is really weak this time,” another STS bars making company representative said.
The weak raw materials market was another reason for the finished steel price decline, and as a result, lower margins pushed mills to cut output further. Although STS scrap availability was reportedly limited in late October, offers from SE Asia continued to move down, touching the USD 1,330/t CFR Mundra (for 304-grade material). “Weak trends in LME are also pushing our [finished STS products] market down,” an Indian supplier noted in a talk to SMR.
The price downtrend and production cuts will likely last during November, but there are some hopes that prices will bottom out in a month. “It seems most mills have order books less than a month, but everybody has inventories enough for at least one month. We hope another wave of output decline will be helpful,” a top manager at a major longs-making company in India told SMR.
Post time: Nov-21-2023
