Indian HRC export offers fall on limited interest from overseas buyers

Indian Hot Rolled Coil (HRC) export offers reported to have dropped by $12 this week on limited buying interest from global buyers. SteelMint’s benchmark index for 2mm HRC (SAE1006) stands at $513/t Fob India (assessed on 29th Sep’20) for November shipments. No deals have been reported, except a 10,000 mt parcel sold to Europe at around $550-555/t CFR levels (equivalent to $520/t FoB levels) last week.

Driving Factors

• Chinese mills have been active in the market since the last few weeks for prompt shipments (October) against Japanese, Korean, Russian, and Indian which are offering Nov/Dec shipments
• Chinese offers have been reported at around $510-515/t CFR Vietnam, $515/t CFR UAE, and similar levels to other importing countries. These offers are significantly lower as compared to other origins
• Russian currency has dropped to a six-month low on falling oil prices. Russian mills may not mind closing deals at lower levels. Notably, Russia is one of the largest HRC exporters and exports around 5-6 mn t HRC every year.
• Vietnam’s Hoa Phat has announced to start selling HRC from its new mill (100,000 tonnes per month capacity) by the end of 2020. Notably, Vietnam is India’s largest market for HRC.
• Vietnam’s domestic steel mill Formosa Ha Tinh is increasing supply of rerolling grade instead of pipe-making grade. This has also added up to domestic supplies in Vietnam, hence resisting bids for imported HRC
  
  What to expect?
• Indian mills have recently raised domestic HRC prices by INR 2,000-2,500/t at the beginning of Sep’20 and another hike was announced by INR 700-1000/t towards the end of this month. Prices have increased by INR 5,700-6,000 since Jul’20. However, we observe resistance from stockiest and dealers at these levels. Further hikes from here may be difficult for steel mills.
• Indian mills are fairly booked for October and mid-November shipments. We expect Indian mills would like to wait till Chinese national holidays (1st Oct to 8th Oct) get over and seek more clarity on price direction. Generally, global steel prices move up during November/December, when Chinese mills curtail production owing to winter restriction imposed by the government.
•  In case domestic demand fails to pick up, we feel Indian mills will resume export offers by mid-October for Nov/Dec shipments.